CFDs are complex instruments. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money. CFDs are complex instruments. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.

Marks & Spencer sees share price plummet after issuing profit warning

The British multinational retailer has seen its share price tumble more than 9% on Thursday morning after its Q3 results showed the company suffered a major sales slump.

Marks & Spencer (M&S) reported a significant decline in sales in its third quarter (Q3) results on Thursday, forcing the company to issue a profit warning that sent its shares tumbling more than 9%.

However, full year guidance was left unchanged, although gross margins are expected to be around lower end of guidance, largely offset by its cost reduction programme

M&S is trading at 198p as of 11:50 GMT on Thursday.

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M&S sees sales slump

In the 13 weeks to December 28, M&S saw sales fall by 0.6% to £2.8 billion, with international revenue 2.3% lower at £251m.

‘We delivered an improved performance in Q3 across both main businesses,’ M&S CEO Steve Rowe said. ‘The Food business continued to outperform the market and Clothing and Home had a strong start to the quarter, albeit this was followed by a challenging trading environment in the lead up to Christmas.’

‘As we drive a faster pace of change, disappointing one-off issues - notably waste and supply chain in the Food business, the shape of buy in Menswear and performance in our Gifting categories - held us back from delivering a stronger result,’ he added.

M&S will report its full year results on May 20.

Berenberg upbeat about M&S outlook

Ahead of its disappointing set of Q3 results, analysts from Berenberg upgraded their rating for the stock from ‘sell’ to ‘buy’ and issued a target price of 250p a share.

The Hamburg-based investment bank admitted that the retailer must overcome challenging market conditions in 2020 and address its weakness online, with its ‘legacy store estate restricting M&S's ability to adapt to the changing retail landscape’.

Berenberg, however, welcomed the appointment of Richard Price as M&S’s new managing director for clothing and home. Prior to joining M&S, Price served as CEO of F&F clothing at Tesco.

Analysts at the bank also noted that the company’s joint venture with Ocado will provide long-term growth opportunities for M&S’s grocery business and improve its online presence.

Based on M&S trading at 198p a share, analysts from Berenberg believe that the stock has a potential upside of 26.3%.

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