Marks & Spencer share price slides as Barclays turns bearish on retailer

on Jul 22, 2016
Updated: Oct 21, 2019

Shares in Marks & Spencer (LON:MKS) have fallen deep into negative territory in today’s session, pressured by a downgrade at Barclays, which expects things at the blue-chip retailer to get worse before they get better under the group’s turnaround plan. The comments are a blow for the company which recently unveiled a slump in its quarterly clothing sales.

As of 13:32 BST, Marks & Spencer’s share price had fallen 3.03 percent to 318.54p, underperforming the benchmark FTSE 100 index which has climbed into positive territory and currently stands 0.42 percent higher at 6,727.85 points. The retailer’s shares have lost some 40 percent of their value over the past year, and are down by just under 30 percent in the year-to-date.
Analysts at Barclays trimmed their rating on Marks & Spencer today from ‘equal weight’ to ‘underweight,’ and slashed their price target on the stock from 410p to 290p.

“We expect a painful transition and material earnings per share downgrades,” the analysts were quoted as saying. “We view the price cuts in clothing lines as an essential but mostly corrective action that could keep General Merchandise LFLs [like-for-like] deep in negative territory in FY17 and FY18.”
The comments came after Marks & Spencer recently unveiled that its sales had inched 0.2 percent higher at constant currency in the 13 weeks to July 2, dragged down by clothing and home sales which plunged by 8.9 percent on a like-for-like basis. The decline was attributed to lower prices and fewer promotions, part of new boss Steve Rowe’s revival strategy for the retailer’s struggling General Merchandise division.
Barclays described the current low visibility on earnings per share as unappealing, adding that with no signs of stabilisation in consumer confidence, a re-rating was unlikely.
As of 13:59 BST, Friday, 22 July, Marks and Spencer Group Plc share price is 318.60p.