While Marks & Spencer (MKS) has announced a 6 per cent fall in first-half underlying profit before tax, more important was news of a second-quarter improvement in trading.
The retailer was rocked earlier in the year by problems with sourcing and stocking clothing, but there are encouraging signs that the division's new management team have started to get a grip on the situation. A first-quarter like-for-like sales fall of 6.8 per cent in general merchandising turned into a 1.8 per cent second-quarter decline and gross margins have been improving, too. In the six-month trading period, M&S reported a 95 per cent basis point rise in margins from general merchandising and a 35 basis point uptick from food.
Overall, second-quarter sales were 2.5 per cent ahead following a 0.7 per cent first-quarter decline and food continues to outperform, registering 1.1 per cent like-for-like first-half growth. Concept stores also produced good results. Overall, sales were 2.6 per cent higher than the rest of the estate, with particular strength in beauty and home.
The strongest sales performance came from overseas: in the second quarter, revenues grew by 6.1 per cent with China and India, where M&S is focusing its expansion, doing particularly well, while older European stores struggled.
Broker Panmure Gordon expects full-year EPS of 31.8p, rising to 36.5p in 2014 (from 34.6p in 2012).
| Marks & Spencer (MKS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 396p | MARKET VALUE: | £6.4bn | |
| TOUCH: | 395-396p | 12-MONTH HIGH: | 398p | LOW: 301p |
| DIVIDEND YIELD: | 5.9% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 141p* | NET DEBT: | 116% | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 4.68 | 321 | 16.0 | 6.2 |
| 2012 | 4.70 | 290 | 14.2 | 6.2 |
| % change | +0.4 | -10 | -11 | |
Ex-div: 14 Nov Payment: 11 Jan *Includes intangible assets of £615m, or 38p a share | ||||
