Can Marks & Spencer rediscover its spark following next Wednesday’s full year results?
It’s not much of a surprise that M&S hasn’t had the best start to 2018. Up until mid-April it was on a really bad run, falling from an opening price of £3.16 to a sub-£2.70 closing levels not seen since early 2009. It has picked up in the last month or so, however, oh so briefly teasing £3 on May 10th. Marks & Spencer now sits at a current trading price since £2.93.
The firm’s latest update came in January, when it reported its poorly received – stock fell more than 7% in a single session – figures for the 13 weeks to the end of December. Group sales for Q3 dipped 0.1% to £3.167 billion, with total UK like-for-like sales slumping 1.1% over the Christmas quarter.
A 2.8% decline in UK like-for-like clothing and home sales was bad, but not necessarily a complete shock given the general direction of trading and the brand’s largely outdated image. However, a 0.4% drop in comparable Food sales was a real blow, the upscale grocer suffering from consumers’ ‘tighter budgets’. Online sales at M&S.com, meanwhile, rose just 3%, a miserly increase way behind its ostensible peers, and a poor return on the company’s investment in logistics.
In terms of Marks & Spencer’s annual results next week, investors are going to want to see that group revenue growth return to positive territory in Q4 in order to preserve the 2.6% interim jump posted last November. Given March’s high street-harming ‘Beast from the East’, however, that may be a big ask. An improvement in the food division could also be important, especially since M&S had stated it was ‘making further changes to get the business back on track in the year ahead’.
Marks & Spencer Group (LON:MKS) PLC has a consensus rating of ‘Hold’ alongside an average target price of £3.23.
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