British retailer Marks & Spencer raised its profit outlook on Tuesday, saying demand in stores had helped it to win new customers for its clothing, home and food businesses, sending its shares up sharply.

The 139-year old group, whose shares have risen 66 percent so far this year, said it now expected profit growth in its full 2023-24 year, having previously forecast a small decline. Its shares jumped 8 percent.

Like other major British retailers, M&S has benefited from robust consumer spending despite a cost of living crisis that has entered its second year, driven by 14 consecutive interest rate rises designed to tackle stubbornly high inflation.

But the high street stalwart has also benefited from its focus on providing high quality food, which has helped to win over shoppers who are less keen to dine out, and well-priced fashion ranges that are refreshed more regularly.

The unexpected statement, which promised “a significant improvement” against previous expectations when it publishes interim results in November, helped to raise the share prices of other retailers including Next and the owner of Primark.

Clothing group Next upgraded its profit forecast earlier this month, lifting it for the second time in three months.

M&S said in the first 19 weeks of the year like-for-like food sales grew over 11%, while clothing & home sales were up over 6% on the same basis. Group operating margin “continued to be robust.”

It did warn however that considerable uncertainties about the economic outlook remained, and there was a risk that the consumer market would tighten as the year progressed.

In Fashion

Under CEO Stuart Machin, M&S is seeking to build a more resilient business with a focus on the quality and value of its clothing and food, heavy investment in technology and e-commerce, and a radical overhaul of its store estate.

Once the destination for most British households to buy school uniforms, bedding, food and underwear, M&S has for years struggled to win over younger, fashion-conscious customers while retaining its reputation for high-quality basics such as jumpers that is demanded by its older clientele.

But investments in the speed at which it can deliver new fashion ranges has won plaudits in the fashion press, helping a retailer that has a presence on most British shopping streets to regain a sense of style.

Investments to lower the price of certain food items, while also still offering high-quality wine and meal deals for those shoppers looking to stay at home more, has also boosted sales.

Clive Black at Shore Capital, the house broker, said sentiment around M&S had taken a long time to improve after other turnarounds failed to materialise, but he lifted his profit outlook by 9 percent.

By James Davey and Yadarisa Shabong; Editors: Rashmi Aich, Kate Holton and David Evans

Learn more:

Marks & Spencer Promises Surprise From Reshaped Business

British clothing and food retailer Marks & Spencer is emerging from the Covid-19 crisis as a very different business that will surprise people with its financial performance, chairman Archie Norman said.