Here’s why the Marks & Spencer share price rose by 106% in 2023

Jon Smith reviews the exceptional performance of the Marks & Spencer share price over the past year, with a look ahead to 2024.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

2023 concept with a lightbulb replacing the zero

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

In my eyes, Marks & Spencer (LSE:MKS) was one of the stand-out performers in the stock market last year. The Marks & Spencer share price rallied by a whopping 106%, moving up from the FTSE 250 to the FTSE 100 in the process. Here’s what went on during the crazy year.

Getting the ball rolling

To get some context on the broader picture we need to zoom out. For much of the past five years the stock has been a rollercoaster, characterised by sharp increases and steep declines. This followed the fundamental problems it had of maintaining tired stores and losing customers to competitors.

Add into the mix, the problems of rising grocery inflation, which started back in 2021. At the start of 2022, the business announced a strategy to reshape the firm.

As we came into the start of 2023, there was more optimism in the air. In January, a trading update showed that the Christmas trading period yielded a total sales increase of 9.9% over the prior year.

This was backed up in early Q2 with the full-year results for the prior year. Sales jumped by 9.9% year on year, with profit before tax increasing 21.4%. At £475.7m, this was the highest profit figure since before the pandemic.

Momentum pushing on

Investors were now all aboard the revamped business, which was starting to catch attention. Measures such as making £400m of structural cost savings over five years were being combined with focusing store openings in growth areas.

The firm was also seeing the benefits of the joint venture with Ocado as well as improving its own supply chain. I could argue that such logistics improvements should have been done years ago, but the point is that the company was finally catching up to where it needed to be in order to be competitive.

Into August, the management team had more to cheer about, with the stock promoted back to the FTSE 100. It had dropped out of the main index back in 2019 when it was in the doldrums.

More good news, but risks ahead

As we came towards the end of the year, the half-year results showed a 56.2% jump in profit versus H1 of the previous year. The dividend was reinstated for the first time since 2020, giving income investors a reason to consider buying the stock for dividends.

For a stock to double in a year, everything needs to go well. That has certainly been the case for Marks & Spencer. However, this doesn’t make it risk-free for this year. In fact, it flagged up uncertainty going forward due to factors such as high interest rates and geopolitical events. The UK consumer still isn’t feeling overly optimistic and this could dampen demand this year.

Even with the risks ahead for 2024, the past year has been stellar for the retailer and it carries a lot of positive momentum with it right now.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Jon Smith has no position in any of the shares mentioned. The Motley Fool UK has recommended Ocado Group Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Here’s the best-performing FTSE 100 stock of the last 10 years

Private equity firm 3i has outperformed the rest of the FTSE 100 over the last 10 years. And its big…

Read more »

Fans of Warren Buffett taking his photo
Investing Articles

Here’s why Warren Buffett is selling shares (and why I’m not)

Warren Buffett cited tax considerations as his reason for selling shares in Apple. But this isn’t something most UK investors…

Read more »

Investing Articles

What on earth is going on with the AstraZeneca share price?

The AstraZeneca share price has fallen 30% from its peak in August. Dr James Fox explains what’s going on with…

Read more »

Investing Articles

2 high-yield FTSE 100 shares I’d consider buying for passive income…and one I’d avoid

Some FTSE 100 stocks have eye-popping dividend yields. But will the passive income actually be dished out? Paul Summers takes…

Read more »

Smart young brown businesswoman working from home on a laptop
Investing Articles

These 2 former stock market darlings are trying my patience! Time to sell?

Harvey Jones thought he was getting a bargain when he snapped up these too much-loved FTSE 100 dividend growth stocks.…

Read more »

Investing Articles

Here’s how I’d use £3,000 to target a second income that grows each year

Our writer explains the approach he'd take to trying to build a second income that gets bigger over time, by…

Read more »

Elevated view over city of London skyline
Investing Articles

Is it time to buy this incredible FTSE dividend share?

Christopher Ruane examines one FTSE 100 share with a phenomenal dividend history. Does a steep share price fall this year…

Read more »

Concept of two young professional men looking at a screen in a technological data centre
Investing Articles

This FTSE 100 share has just crashed another 20%. Its P/E is now just 9.9 so should I buy?

Harvey Jones was tempted to buy this FTSE 100 share after it crashed in October. Now it's crashed again, it…

Read more »