We comment on the results from the British high street icon
Marks & Spencer profits tumble on news of 100 store closures
- Shares in retailer up 3.6% likely on news that dividend for the year was maintained
- Adjusted profits fell 5.4% as food operation falls off and sector challenges remain
- The Share Centre recommends Marks & Spencer as a ‘hold’ for medium risk investors
Shares in British high street icon Marks & Spencer are up 3.6% in early morning trading today, albeit the price is still below the levels of 20 years ago. This downward trend is just one example of the difficult times the group has had, and continues to face, in these changing times for retailers. What’s not helping the group’s proposition is that it is pushing close to relegation from FTSE 100 in the latest quarterly shuffle next week.
In its full year results released to the market today, M&S said that adjusted profits fell by 5.4% to £580.9m and margins at its food operation, which has up to now been one of its more successful areas, fell off. The group is currently involved in a transformation program and the headlines today have been dominated by future store closures, which will be costly to the group. Indeed, management highlighted how 100 shops would close by 2022 in a move described as ‘vital’ for its future.
There was an element of optimism for long suffering investors as the dividend for the year was maintained, making a total of 18.7 pence. Moreover, the company recognised a shift to internet sales with management wanting 30% of future sales to come from online. In the near future, whilst the group expects a slight fall in food margins, it anticipates slightly higher levels for its clothing and home areas.
It’s our view that there is too much uncertainty surrounding the group to recommend it as nothing more than a ‘hold’ for medium risk investors.
All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy