M&S set to reveal higher profits after growing its share of the market

Marks & Spencer is set to unveil growing profits as it gives a glimpse into whether its customers are weathering the cost-of-living storm, or feeling the pinch.

The retailer is expected to report higher earnings for the six months to September when it updates shareholders on Wednesday.

It could see pre-tax profits hit around £270 million, up from £206 million this time last year, according to analysts for Numis Research.

M&S is a "highly seasonal business", analysts said, making more money during the second half of the year, which includes the crucial Christmas sales period.

The company said in August that its half-year earnings are likely to be better than it had previously projected after increasing market share in both its clothing and home, and food businesses over the summer.

It indicates that consumer spending has been resilient despite a challenging backdrop for the retail sector, as higher mortgage costs and household bills have squeezed shoppers’ budgets.

But investors will be looking for evidence that customers might be feeling the pinch, as well as any impact from unusually warm weather affecting demand for autumn clothing ranges.

Fashion chain NEXT said earlier this week that the heatwave in September temporarily hit sales, with shoppers shunning demand for new autumn lines including coats, jackets and knitwear.

M&S’s update will come less than a week after rival Sainsbury’s said that profits will be at the top end of guidance this year, and said grocery sales had risen by 9% in the second quarter of the year.

Experts pointed out that M&S’s customer base is generally more affluent and could be less impacted by the cost-of-living crisis than those of many of its rivals.

Susannah Streeter, Head of Money and Markets at Hargreaves Lansdown, said: "Demand for M&S food has remained strong and is arguably more protected from the rising inflation we’re seeing at the moment.

"At a more premium end of the market, M&S’s core customers aren’t as sensitive to price.

"M&S has potential to gain from an increasing trend of people treating themselves while dining in, rather than spending in restaurants."

She added that September’s warm weather has been "causing havoc" with consumer spending and could have delayed the shift to new season fashion ranges.

Meanwhile, in the last year, M&S shares have been soaring, up more than 100% in just 12 months, and nearly 140% higher than the two-year low the shares hit in October 2022.

The group’s stellar run on the stock market helped it return to the FTSE 100 in September, four years after it was relegated to the second tier amid falling sales and intense competition.