• Profits fell 64% at M&S as it was affected by store closures and later timing of Easter
• Retail giant maintained its dividend and highlighted food business continues to perform well as 250 Simply Food stores are planned to open by 2020
• The Share Centre recommends Marks and Spencer as a ‘buy’ for contrarian investors
As Marks and Spencer updates the market Ian Forrest, investment research analyst at The Share Centre, explains what it means for investors.
“Marks & Spencer was one of several major retailing groups to update the market today along with Dixons Carphone and Kingfisher.
“M&S reported a 0.6% fall in fourth quarter sales today but said it was seeing good results from the early changes made to its clothing and home business as part of the major restructuring plan which began in 2016. Overall profits for the year fell 64% to £176.4m but that was affected by exceptional costs such as closing stores in several international markets and the later timing of Easter this year. The company maintained its dividend and says the food side of the business continues to perform fairly well with plans to open a further 250 Simply Food stores by 2020.
“While these results do not at first appear especially promising it is hard to judge given that the group is in the middle of a big restructuring plan. There are certainly some good signs and the maintenance of the dividend is a positive signal for investors. The changes will take time to implement so this is only for contrarian investors and we maintain our buy recommendation but would recommend investors drip-feed into the stock for now.
“In other market news, Dixon Carphone’s fourth quarter trading update was well received by the market with the 2% rise in like-for-like sales beating expectations. By contrast, first quarter results from Kingfisher, the owner of B&Q and Screwfix, did not go down as well with weak sales in France and disruption caused by internal changes leading to a 0.6% drop in sales.”