Financial Trading Blog
Stock of the day 05/01/2016 – Marks & Spencer Group PLC
After being stuck in a downward spiral since the end of May, falling from a 2015 high of £5.92 to the £4.70s by September back to a more respectable £5.18 by the beginning of November, things were looking up for M&S when it announce its half year results. Not that the company posted a particularly spectacular set of figures on November 4th, its like-for-like general merchandise (i.e. Marks & Spencer’s much maligned clothing division) sales dropping 4% with M&S.com sales also falling a worrying 6%.
(Source: IT-Finance.com 05/01/2016)
No instead of blockbuster results, M&S investors, desperate for the slightest bit of good news, were sufficiently impressed by a 20th consecutive quarter of growth from its food department (up 1% for the 6 months to September 27th) and an unexpected 2.3% rise in first half profits to £268 million (boosted by higher margins and lower costs), causing the stock to rally 4.5% to a 3 month peak of £5.50.
However, the initial good will that greeted Marks & Spencer’s half year figures couldn’t last for long, and as November wore on the stock resumed its slide, this despite revealing its new spring/summer 2016 collection. Cut to the start of December and the stock was on the verge of falling below the £5 mark, something M&S managed with aplomb as the year began to wrap up. That dismal end to 2015, and a tricky start to the New Year, leaves the stock at a current trading price of £4.28 (IT-Finance.com, 05/01/2015).
Sadly for the under-pressure Marc Bolland the UK retail earnings season kicked off with a set of sub-par, warm-weathered blamed figures from (the traditionally strong) Next, something that is unlikely to change when Marks and Sparks reports on Thursday. Analysts are expecting a 3-5% fall in the company’s third quarter clothing sales, something that is unlikely to be mitigated by a meagre 0.3% rise in sales for its food division.
Marks & Spencer Group PLC has a consensus rating of ‘Hold’ with an average target price of £5.65.
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