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M&S results: analysts' verdicts

Marks & Spencer reported a 1.2% drop in like-for-like general merchandise sales this morning. Analysts give their reaction to the news.

Kate Calvert, analyst at Investec, said: “Not the easiest of halves given the weather, but the increased flexibility in M&S’s business model stands out, enabling it to deliver profit before tax 5% ahead of consensus driven by general merchandise gross-margin improvement. Management appears to be more confident on the general merchandise gross margin opportunity overall.”

David Stoddard, analyst at Edison Investment Research, said: “We sympathise when M&S invokes the unseasonable weather for its lacklustre first-half result but not as important as what happens in the next quarter. M&S and others will be hoping for ”Goldilocks weather”: bad enough to generate sales of warm clothing but not so bad that punters can’t get to the stores or delivery vans can’t get to the punters. It’s still all about the weather.”

Sophie McCarthy, consultant at Conlumino, said: “High street institution Marks & Spencer today posted a rather mixed set of numbers, with an increase in underlying profit balanced by a further slide in general merchandise sales as the retailer continues to struggle to regain its competitive edge. General merchandise has become somewhat the Achilles ‘ heel of Marks & Spencer as it attempts to turn around the performance of a clothing business that is widely regarded to have fallen behind the market in terms of both style and proposition. Within today’s results are some promising signs of progress but the business still appears to be transitioning slowly.”

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