Marks & Spencer share price rallies as Barclays points to food business focus

Analysts initiate coverage with ‘overweight’ rating

Marks & Spencer share price rallies as Barclays points to food business focus

Shares in Marks & Spencer Group (LON:MKS) have advanced in today’s session, outperforming a lacklustre broader market, with analysts at Barclays initiating coverage of the stock with a bullish rating. The bank has pointed to the group’s food business which Barclays argues has had good track record over many years.

As of 13:27 BST, Marks & Spencer’s share price had added 1.69 percent to 359.69p, as compared with a 0.15-percent rise in the Footsie. The group’s shares have lost more than 17 percent of their value over the past year, but have gained over two percent so far in 2017.

Barclays initiated coverage on M&S with an ‘overweight’ rating today, valuing the shares at 410p. The bank acknowledged that like the rest of the UK general retail sector, the FTSE 100 group faces some significant headwinds given weakening consumer sentiment and currency pressures on input prices, especially in the Clothing & Home segment. It, however, also noted that M&S’ food division has had a good track record over many years, pointing out that the retailer is becoming increasingly food-focused over time.

“M&S cannot avoid the industry headwinds although its older and wealthier customer base might give it some protection,” the analysts pointed out, as quoted by Sharecast. “However, the new CEO has outlined a comprehensive and sensible plan to improve its store estate and its product offering. Initial results appear encouraging with M&S delivering its first full price market share gains in over five years.”

The upbeat comments come after the blue-chip retailer unveiled plans yesterday to open 36 new UK stores over the next six months, with 34 of those to be food stores. In November, the retailer signalled that it would close about 30 stores selling clothing, homewares and food and downsise or convert another 45 into food stores.

As of 14:30 BST, Friday, 21 April, Marks and Spencer Group Plc share price is 360.50p.

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