M&S - Marks and Spencer - MKS - Share Chat

Marks and Spencer stock has seen a recovery of 30% over the past month. Its latest results indicate a tough road ahead, but its shares may be good value with a P/E of 8. As I dig into its earnings figures here, I’m wondering if anyone has input on the stock’s trajectory moving forward.

Marks & Spencer hailed strong Christmas trading as it unveiled record food sales, and its highest clothing and home market share for seven years.

The retailer reported a better-than-expected 6.3 per cent increase in like-for-like sales across its food halls in the 13 weeks to 31 December.

This included its best ever Christmas trading day on 23 December, with sales of more than £80million, as the retailer achieved its best ever market share for the period.

M&S saw clothing and home comparable store sales rise by 8.6 per cent, giving it a market share of over 10 per cent, which is the highest since 2015.

M&S stuck by previous guidance for its full-year results in spite of wider economic woes and fears over consumer spending amid the cost-of-living crisis.

‘There are clear macro-economic headwinds ahead and underlying cost pressures, but our strong trading performance provides confidence that the results for the year will be consistent with the guidance set out at the group’s interim results in November,’ the retailer said.

Most analysts pencilled annual underlying profits of between £400million to £410million, against the £523 million reported in the 2021/22 financial year.

But the group said it was continuing to focus on its ongoing overhaul and cost savings in the face of soaring inflation.

Stuart Machin, the boss of M&S, said: 'M&S sustained trading momentum through the peak quarter and both food and clothing and home have delivered strong growth.

‘Given the inflationary pressures impacting our customers and our business, M&S is taking action to structurally reduce costs and reinforce our customer proposition.’

The group is looking to make savings of about £150million in 2023/24 to offset soaring inflation and help it weather tougher trading.

M&S recently said it is speeding up a major shake-up of its shops estate, which will result in the closure of 67 larger branches as part of long-term plans to axe 110 stores under a sweeping overhaul led by previous boss Steve Rowe.

Its third quarter and festive update showed strong demand for value ranges as well as more upmarket lines, with its Remarksable Value products now appearing in more than 20 per cent of baskets, while its top tier M&S Collection sales also grew by over 20 per cent.

The group’s resurgent performance in clothing and home continued, albeit at a slower pace, with comparable store sales growth lower than the 13.7 per cent seen in the six months to 1 October.

In the third quarter, it said its clothing arm’s store sales increased by 12.8 per cent as shoppers returned to the high street at Christmas, while online sales edged 0.7 per cent higher as click-and-collect sales orders surged by 20 per cent.

Total UK sales rose by 9.7 per cent to £3.3billion, while international sales grew by 12.5 per cent to £312million in the quarter.

M&S shares fell today and were down 1.01 per cent or 1.45p to 141.95p this morning, having plummeted over 40 per cent in the last year.

Neil Shah, executive director, content and strategy at Edison Group, said: 'In spite of the cost-of-living crisis and inflation impacting families across the nation, the results have shown that over the Christmas period shoppers still flocked to stores.

'M&S has certainly adapted to the economic climate, with its investment in its “Remarksable Value” range resulting in strong volume growth, with these lines now in over a fifth of baskets.

'Shoppers were also willing to indulge, with its top tier M&S Collection sales also growing by over a fifth.

'Whilst traditionally recognised as a more premium retailer, looking ahead, M&S will look to capitalise on its value range to establish itself as an economical option in the market, in addition to making gains from its investment in technology which has seen substantial growth in monthly active App users to approximately 0.5million.

‘While economic headwinds have sparked fear in many retailers, M&S has proven it is more than capable of meeting the challenges.’

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A good day to hold M&S

Profit before tax rose 56% to £326m in the six months to 30 September, driven by higher food and clothing sales.

M&S has been focussing on upgrading its shops, clothing lines and digital offer as part of a big turnaround plan.

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I have £10s worth hehe, some others must be up big tho