Heavyweight broker JP Morgan Cazenove says: “At a time of year when confidence in delivery is critical to customers, we expect the resulting negative press to have been detrimental to online demand.”
The broker notes that the shares have already fallen on reports of the disruption to the socks & knickers seller’s online shopping portal, but combined with unreasonably mild weather in the first two months of the final quarter of the year, it is probably wise to err on the pessimistic side in terms of sales forecasts.
Cazenove has chopped its fiscal third quarter sales projections for M&S’s general merchandise division, and is now predicting like-for-like (LFL) sales to decline by 2.5% year-on-year; previously it had pencilled in a 1.0% decline.
Caz retains its “positive fundamental stance” on the High Street bellwether. Its recommendation is to be overweight in the stock and it has a price target of 550p, almost a pound above the current share price.