Marks and Spencer’s Share Price Climbs Despite Drop in Clothing Sales
iNVEZZ.com Tuesday July 9th: Marks and Spencer’s share price (LON:MKS) rose by 0.96 percent to 464.10p on the London opening bell today after the company reported that strong performance in the food division had helped offset the eighth consecutive quarterly fall in underlying sales of general merchandise.
Like-for-like sales in general merchandise, which includes non-food products such as clothing and footwear, decreased by 1.6 percent in the 13 weeks to June 29. The decline in fiscal first quarter sales was in the middle of analysts’ forecasts of a fall of 0.2 percent to 3.0 percent and was better than the 3.8 percent drop in the fourth quarter of the company’s fiscal 2012-13 year.
In an interim statement published today Marks and Spencer said it was relying on an enhanced quality autumn/winter fashion range due to launch into stores at the end of July to revive its declining clothing sales. The collection will be the first released under the supervision of Belinda Earl, former chief executive at both Debenhams and Jaeger, and newly appointed head of style of Marks and Spencer.
Food like-for-like sales increased by 1.8 percent in the first quarter, close to the upper range of analysts’ forecasts of a 1.0 to 2.0 percent rise but still below the 4.0 percent increase in the previous quarter. M&S’s food business continued to deliver more than half of the group’s total revenue.
“Our General Merchandise business showed some improvement this quarter and the Food business delivered another excellent performance, continuing the strong underlying trend,” Marc Bolland, chief executive, said in the interim management statement. “We continue to make good progress with our plans to transform M&S into an international, multi-channel retailer.”
The company said it remained cautious about the outlook and would continue to manage its business tightly. Bolland has spent the last two years ramping up investments in store formats, clothing quality and information systems in an attempt to boost sales. The chief executive saw his pay reduced by more than a third to ₤2.1 million for the last fiscal year due to disappointing clothing sales and falling profits.
**Analysts on Marks and Spencer**
!m[M&S Bets on Belinda Earl’s Autumn/Winter Fashion Range to Revive Sales](/uploads/story/3778/thumbs/pic1_inline.jpg)
Panmure Gordon analysts reaffirmed their “buy” rating on M&S’s shares in a research note sent to investors last week. The firm gave the stock a price target of 516p.
As of yesterday a total of eight analysts had rated the stock with a “sell” rating, eight had given it a “hold” rating and ten had assigned a “buy” rating. M&S’ shares currently have a consensus rating of “hold” and an average price target of 447.32p. The company’s share price has climbed by more than 20 percent in the year-to-date.
**M&S’ share price was 462.90p as of 09.07.2013, 08.05 BST.**