As the share price drops again, the company is hoping that its planned changes can help improve performance.
Marks & Spencer (MKS) fail to deliver the goods in latest update
- Clothing and food sales were down 3.6% and 0.6% respectively.
- CEO hints to green shoots of recovery through extra investment for store refurbishment, but at significant cost.
- Sales still predicted to fall this year so we continue to view the shares as a sell.
Marks & Spencer reported full-year results today which underlined the challenging times the company faces. Clothing sales fell 3.6% while food was down 0.6%. The company also increased the number of stores due to close by 85, which means that 120 are now due to shut. M&S admitted that it continues to have problems with its clothing offer and expects sales there to fall further in the new financial year, along with a further drop in food sales. The CEO said there were green shoots of recovery and extra investment is planned for refurbishing stores, but £439m in exceptional costs reflected many of the changes needed. That reduced pre-tax profits to £84.6m and the dividend was cut by 26%.
The market was clearly not impressed by the figures and the shares dropped 4% in early trading. It is clear that the company still has a long way to go in improving its performance. While changes are being made, and the deal with Ocado earlier this year was a positive move, the company is asking shareholders, who’ve seen the share price halve in recent years, to contribute through a rights issue.
Our View on Marks & Spencer - Sell
The fact that sales are still expected to drop this year suggests the turnaround is still some way off. We continue to view the shares as a sell.
If you're looking to invest in the General Retail sector and you're not currently a customer of The Share Centre, sign up today. You can also view the full range of General Retail companies and their share prices.
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.