Marks & Spencer share price: Analysts see recovery as elusive

Marks & Spencer’s (LON:MKS) recovery remains elusive, Jefferies has said, as it retained its neutral rating on the high street retailer. The comments come ahead of a strategy update by the group’s new boss Steve Rowe who will tell investors next week how he intends to revive the retailer’s fortunes.

Marks & Spencer’s share price has been little changed in today’s trading, having added 0.05 percent to 439.50p as of 10:22 BST, and underperforming the benchmark FTSE 100 index which currently stands 1.29 percent higher at 6,131.35 points. The shares have lost just under a quarter of their value over the past year, and are down nearly three percent in the year-to-date.
Jefferies reiterated its ‘hold’ rating on Marks & Spencer yesterday, with a price target of 410p on the stock, arguing that a significant recovery at the blue-chip retailer might remain elusive.

“M&S’s new chief executive Steve Rowe has already made his presence felt through streamlining the management team,” the broker’s analyst Caroline Gulliver said, as quoted by Citywire. Her comments came after Rowe, who took the reins at M&S barely a month ago, unveiled a shake-up of the group’s management team, with the move intended to drive speedier decision making and move the business closer to its customers.
Jefferies’ Gulliver, however, added that while “next week’s full-year results meeting could set an optimistic tone,” the broker believed that “macroeconomic headwinds will limit upside”. M&S’ results are due out on May 25 when Rowe is also expected to unveil his restructuring plan to boost the retailer’s long-struggling clothing department.
Simon Gergel, chief investment officer for UK equities at Allianz Global Investors, one of M&S’s top-40 shareholders, told Reuters that the retailer’s “general merchandise business has struggled for years to gain any momentum so we’ll be looking to see the extent to which Rowe can turn that around and how credible the strategy is”.
IG’s market analyst Chris Beauchamp meanwhile forecast in a note yesterday that the retailer’s new boss will focus on two aspects, namely price cuts and improving the quality of clothes.
“The CEO may look at boosting the space given to food lines in many stores, since this has shown good growth, notably in the ‘Simply Food’ stores,” Beauchamp added.
As of 10:48 BST, Friday, 20 May, Marks and Spencer Group Plc share price is 440.20p.