Financial Trading Blog
Stock of the day 07/01/2015 – Marks & Spencer Group PLC
Things were looking good for M&S at the start of 2014, as share prices quickly reached what would turn out to be its year high, from £4.34 at the start of the year to £5.12 by the end of February. However, this high soon turned into a prolonged decline as Marks & Spencer struggled to post gains, culminating in a 2014 of £3.82 as M&S’ own weaknesses were compounded by the FTSE-wide slump in mid-October.
Post-October saw M&S regain its losses somewhat, as a relatively strong half year report led a bullish charge, reaching £4.96 by the start of December. Yet it was still the food section of the company that propelled these gains with sales growth of 3.6%, rather than the general merchandise section that saw first half sales fall -2.3% due to ‘unseasonably warm’ autumn weather affecting its clothing numbers.
Despite these struggles, M&S started the year at £4.80, up on the beginning of 2014, and much better than the previous few years’ opening figure. Yet Marks & Spencer isn’t out of the woods yet with analysts predicting that a 0.9% growth in like-for-like food sales over the Christmas period will be wiped out by a 3% fall in general merchandise sales. Online problems plagued the company over this period as customers were unable to get deliveries as normal; however, these sales figures may not be as bad as forecast due to chief executive Mark Bolland’s wariness over slashing prices in the run up to the holidays.
Considering Marks & Spencer’s premier position in the clothing sector, its current woes are an embarrassment as the company loses its grip in an area where it was once dominant. M&S is attempting to make changes, hiring a new Womanswear design team in order to try and reverse the fortunes of its disappointing clothing department. It also recently debuted a new website, and is aggressively expanding into the Asian market.
Yet for all these positive developments, unless Marks & Spencer can make some real changes to its clothing department, its food section will only be able to support the company for so long. And with Societe General downgrading the company to a ‘hold’ rating, M&S may have to weather more tough times in the interim.
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