The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.
Marks & Spencer (full-year results 23 May)
Marks & Spencer (M&S) is expected to report earnings of 27.8p per share, down 8% year-on-year, while revenue rises 1.5% to £10.79 billion. M&S remains in the throes of a turnaround strategy, as it looks to make its long underperforming clothing division more competitive. Continued expansion for its food division has helped to keep revenue moving higher at this part of the business, but the move online is taking longer than thought. Meanwhile, competition from other stores in the mid-price part of the spectrum has limited performance. Margin improvements are crucial, but this is a longer-term process, however continued store closures will help reduce some fixed costs. M&S currently trades on a forward price to earnings (PE) ratio of 10.7, indicating a relatively undemanding valuation, but there is much work to be done.
M&S shares have steadily declined for the past three years. Rallies to the descending trendline from the 2015 high have been seen several times over the past year, with the latest running into trendline resistance around 300p. A failure to break above this would suggest a fresh turn lower, down towards the 2018 low at 261p. Above 300p, the price would target 307p and 314p, then 328p.