Analysts have raised doubt over Marks & Spencer Group’s (LON:MKS) turnaround plan, Proactive Investors has reported. The comments came after the blue-chip retailer updated investors on its full-year performance yesterday, posting a fall in revenue and profits, and announced a rights issue as it looks to finance its joint venture with Ocado (LON:OCDO).
Marks & Spencer’s share price tumbled in the previous session, giving up more than nine percent, as investors digested the results. This morning, the shares have extended their losses, trading 0.77 percent lower at 243.90p as of 08:16 BST, compared with a 0.65-percent drop in the benchmark FTSE 100 index.
Analysts weigh in on results
Proactive Investors quoted Ian Forrest, investment research analyst at The Share Centre, as commenting yesterday that the fact that M&S’ sales were “still expected to drop this year suggests the turnaround is still some way off”. He pointed out that the broker continued to view the shares as a ‘sell’.
Forrest further reckons that while changes are being made and the deal with Ocado earlier this year was a ‘positive move,’ the high street retailer was asking shareholders – who have seen the Marks & Spencer share price halve in recent years – to contribute through a rights issue.
Proactive Investors also quoted Neil Wilson, chief market analyst at Markets.com, as pointing out that he would still view the Ocado “deal as an expensive entry into a sector – online groceries – that doesn’t make any money”.
“It’s better than standing still but no silver bullet. Exposure to the UK high street is a major drag that won’t get any easier,” he pointed out.
Analyst ratings update
Peel Hunt remains bullish on the blue-chip retailer, having reaffirmed its ‘buy’ stance on the company yesterday, without specifying a target on the Marks & Spencer share price. According to MarketBeat, the FTSE 100 company currently has a consensus ‘hold’ rating and an average price target of 275.38p.