viewMarks and Spencer Group PLC

Marks & Spencer set to post worst quarter in three years as wet weather continues

The weekend’s floods will have done little to reassure Marks and Spencer’s investors ahead of what is expected to be a grim trading update tomorrow.


The weekend’s floods will have done little to reassure Marks and Spencer’s (LON:MKS) investors ahead of what is expected to be a grim trading update tomorrow.

The food and clothes retailer is tipped to report its worst quarterly sales performance for three years, with the weather likely to be cited as a culprit.

Analyst Nick Bubb said: “The poor weather clearly hasn’t helped any fashion retailer in recent months, but M&S’s problems in womenswear go far beyond the weather, as they are clearly losing market share.”

In May, the group admitted to stock shortages in womenswear, which will be serious enough to affect its overall performance for the year.

There are also rumours that head of non-food Kate Bostock will announce she is leaving the group.

The analyst consensus is for M&S’s non-food arm to post a 6.9 per cent dip in like-for-like sales.

Meanwhile, chief executive Marc Bolland has to stand up to investors at the AGM and ask for shareholders to support his bonus package for the last financial year.

Investment consultancy PIRC has advised M&S shareholders to abstain from voting for the group’s remuneration report in protest at Bolland’s bonuses. 

Broker Panmure Gordon, which expects the group to post a 7.5 per cent decline in like-for-like general merchandise sales but 0.75 per cent growth in the food business, believes internal management issues need to be resolved before the shares are likely to outperform.

Panmure analyst Jean Roche said: “Although the shares are trading at a significant discount to their historical average valuation, we continue to rate them ‘hold’ as we wait for staff moves to settle down and for signs that weakness in general merchandise (for example loss of clothing market share) has been arrested.”

The broker gives a price target of 340 pence.

In the last three months the share price has sunk 12.6 per cent.

Numis analyst Andrew Wade said: “Bearing in mind that much of the first quarter weakness will be solely weather-related, M&S looks broadly fair value.”

The broker recommends a ‘hold’ stance on the stock at a target price of 340 pence.

Although Singer Capital gives a ‘buy’ stance on the stock it said the update will need to include more stable management in order to retain its stance.

The share price is up 1.3 per cent to 320 pence.


Quick facts: Marks and Spencer Group PLC

Price: 159.05 GBX

Market: LSE
Market Cap: £3.1 billion

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