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Marks & Spencer - Beats forecasts thanks to gross margin gains

December 2014

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

In spite of the mild autumn Marks & Spencer unveiled interims slightly ahead of forecasts. Pretax profit rose 2.3% to £268m, against forecasts for £252m on sales that rose 1% to £4.9bn. Net debt fell £200m to £2,570m.In general merchandise (clothing, homewear) although like-for-like sales declined 2.9% (Q1: -1.5% and Q2: -4%) this was more than offset by a 150 basis point increase in gross margin (+120bps from better sourcing and +30 bps from fewer markdowns). Within womenswear sales rose 1.3% in the first five months, with the group claiming its ranges have improved. Internet sales fell 6.3%, although the trend is improving with Q1: -8.1% and Q2: -4.6% after February’s re-platforming.I ...

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With small companies there is an above average degree of risk compared to buying blue chips. Please be aware that we have not assessed the suitability of any of these investments for you. The newsletter simply states a personal view and diarises the editor’s investment decisions. Please speak to your stockbroker or other qualified individual to ascertain whether any of these companies mentioned would form useful additions to your own portfolios. Past performance is no indication of future success.

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