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M&S interim results: analysts round-up

As M&S announced that second-quarter fashion sales fell by 3.4% today (November 5) after warm weather in September stunted sales of autumn stock, Drapers looks at what City analysts make of the results.

Retail analyst Nick Bubb said: “Profit before tax has come in ahead of expectations at £268m, thanks to notably strong gross margins in general merchandise and some more cost cutting. And so, given a small increase in the interim dividend and talk of increased free cash flow generation the shares are likely to bounce well first thing.”

Neil Saunders, managing director of Conlumino, said: “On the face of it, the latest M&S numbers look rather lacklustre; however, beneath the surface some faint glimmers of hope are beginning to shine through as the company’s strategy starts to deliver. Given that womenswear is one of M&S’s most problematic categories, this swing into positive territory [for the first five months of the financial year] is a sign that the years of decline may well have bottomed out and that M&S’s strategy of becoming more fashion focused is starting to pay dividends. That said, this is a gentle uplift and indicates that while many women are ‘looking again’ at M&S it still has some way to go to become a destination for many of those who previously deserted it.”

Clive Black from Shore Capital said: “Marks & Spencer has issued interim results that are, frankly, robust given prevailing trading conditions. Indeed, in UK clothing and food it can be argued that the group is enjoying the benefit of a few tailwinds. Management is trying to pull its levers and press its  buttons to best effect; so cost control, without a main board chief financial officer, is tight and capital expenditure in the first half has been contained.”


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