Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

M&S profit beat leads analysts to upgrade forecasts for 2025

Published 22/05/2024, 08:59
© Reuters.  M&S profit beat leads analysts to upgrade forecasts for 2025

Proactive Investors - Marks and Spencer Group PLC (LON:MKS) rose 8% to around a six-year higher after its profits beat forecasts, with analysts hailing the significant strategic progress.

The group declared a final dividend of 2p, making for a full payot of 3p pay-out after profits and cash flow jumped.

Peel Hunt (LON:PEEL)'s Jonathan Pritchard says it was a "small beat" at the pre-tax profit level though the results "showcased an exceptional year for the business, with significant strategic progress made".

The profit beat was primarily driven by a very strong food performance, he said, as like-for-like sales accelerated in the fourth quarter from 10% to 12%, and the margin performance "is pleasing, already ahead of the mid-term targets".

Clothing & Home saw LFL also pick up from 4.8% to 5.1%, "but profit was slightly below our estimate".

"International was the only area of concern, but Ocado (LON:OCDO) losses were better than we expected."

While M&S did not offer a current trading statement, Pritchard said the beat on profits "makes it clear to us that forecasts will increase today, by c.5%".

Clive Black at house broker Shore Capital said management had guided to "further progress" and while "we cannot expect a re-run of the exceptional progress achieved in FY24" he felt that M&S "may beat our materially upgraded estimate but the magnitude of that beat to our numbers and consensus is considerable".

Accordingly, he anticipates a more normally balanced first and second half split, with costs remaining in the system be from the UK National Living Wage and business rates or ongoing pass-through from the food supply chain, "which implies disinflation rather than deflation".

Shore Cap forecasts adjusted PBT of £755 million and EPS of 25.7p, upgraded 12% from previous estimates, with circa £801 million pencilled in for 2026.

Read more on Proactive Investors UK


Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.