As M&S posted slightly improved performance in its general merchandise sales in the second quarter, Drapers takes a look at what city analysts make of the retailer’s performance.
Independent analyst Nick Bubb believes that the Q2 sales numbers show a “strong pick-up” for Marks & Spencer, particularly in general merchandise meaning that the first half sales figures have beaten the cautious expectations of only £280m - £285m with the £297m total only a little down from last year’s adjusted/depressed £307m.
“Marc Bolland will have to get profits moving up at M&S if he wants to keep his job, but as we flagged last week there is a quiet confidence at M&S about online growth potential and autumn clothing trading should have been quite good,” he added.
Stockbrokers Shore Capital agree that M&S’s results represent an “improvement” off the back of a less than compelling run rate in general merchandise.
“The M&S investment case does carry risk factors to our minds but also considerable virtues,” said Shore Capital analyst Clive Black.
He also believes that any difference likely to be made by the new additions of John Dixon and Belinda Earl can only really be judged in the new year.
“Despite the disappointment of our profit downgrades at the Q1 stage and the confirmation of lower interim profits year-on-year, Shore Capital remains positive on M&S stock, reiterating that this is a more tempered view now, following the recent rating expansion.
“We are encouraged to see management guide to slightly better outcomes than previously expected on gross margins and costs,” he said.
Investec analyst Bethany Hocking says that she continues to have concerns on M&S despite general merchandising surprising positively.
“Today’s statement is better than feared so the shares may see a small nudge up,” she said.