Marks & Spencer recovery set to continue
The recovery of retail chain Marks & Spencer is expected to continue next week when the high street giant publishes its results for the first half of the year.
M&S is expected to post a massive rise in pre-tax profits from £308.2m (€461.20m) in the first half of last year to between £402m (€601.57m) and £414m (€619.52m) this time around.
The dramatic rise forecast by analysts follows strong sales growth in both food and clothes as M&S benefits from store refurbishment and a high-profile marketing campaign featuring 1960s fashion icon Twiggy.
The company has already posted an 8.2% upturn in like-for-like sales between April and June, and is expected to report further gains between July and September when it delivers its results on Tuesday.
Retail analyst Nick Bubb, of Evolution Securities, predicted like-for-like sales to be up 4.5% in the second quarter. He said that although September trading may have been hit by the unseasonably warm weather, July and August went well for M&S.
M&S chief executive Stuart Rose has so far been reluctant to use the word "recovery" to describe the turnaround at the firm. He has insisted that M&S must deliver a strong performance over the key Christmas trading period amid fierce competition from the likes of Primark and the supermarkets.
But Mr Bubb said M&S was well on the road to recovery, and predicted a strong performance in the second half of the year with winter ranges of clothes set to sell well.
"The comparisons get tough in the second half so it is how well they do from now on in terms of sales and gross margins that counts," he said.
A strong performance is likely to be well received in the City, particularly after disappointing figures from Debenhams, which last month reported flat sales.
Rival Sir Philip Green also failed to overcome difficulties on the high street with a profits at his Arcadia empire - which includes Topshop, Miss Selfridge, Burton and Dorothy Perkins - down by a fifth.
Shares in M&S have risen from 413p a year ago to 657.5p as customers returned to the stores. However, Hargreaves Lansdown stockbrokers analyst Keith Bowman sounded a note of caution ahead of the results.
"While M&S may not have suffered to the same degree as competitors, some analysts consider a 9% rise in the share price over the last three months as already pricing in any expected good news," he said. "Other analysts highlight the group's continuing recovery prospects as firm justification."
