Thursday preview: M&S reports fourth quarter interims

Marks & Spencer is expected to reveal on Thursday that fourth quarter sales were once again weighed down by the struggling general merchandise division.

Berenberg has pencilled in a 2.5% decline in sales at the clothing division but predicts the food division will continue to grow with a 0.4% gain in like-for-like sales.

With former clothing boss Steve Rowe taking over from Marc Bolland as chief executive at the weekend, analysts at the bank said he had two options to counter the highly competitive sector backdrop that has resulted in roughly 23 quarters of GM LFL sales declines and around 7% price deflation across the sector: invest in lowering prices or improving product quality.

For the just-ended 2016 financial year, Berenberg forecasts a 250 basis-point GM gross margin improvement, in line with current guidance, but for the next two years has cut its expectations by more than half to 75bp and 50bp respectively.

"Given issues with brand perception and store locations, we are unconvinced such investments will derive the required increase in revenues," they wrote.

"Furthermore, we believe the shift of sales online adds incremental cost, but is simply cannibalising store-based revenues, putting pressure on margins."

Berenberg reiterated its ‘sell’ rating and cut its earnings and set a price target for the retailer of 380p. It also cut full year earnings per share estimates by 2.9% for 2016, 4.0% for 2017 and 4.1% for 2018.

Rowe, who started as chief executive on Saturday, has signalled he is prepared to make changes to the way the company is run by keeping control over the clothing division.

In a memo to employees he said: “I’m a big believer in keeping things simple. Doing things simply means we serve customers better, manage costs, and work more efficiently.”

Thursday 07 April

INTERIM DIVIDEND PAYMENT DATE
Alumasc Group, Diageo, Galliford Try, PZ Cussons, Renishaw, Ricardo, Standard Life UK Smaller Companies Trust, Wilmington

INTERIM EX-DIVIDEND DATE
Abbey, Animalcare Group, Begbies Traynor Group, Henderson EuroTrust, Marwyn Value Investors Limited, Photo-Me International, Produce Investments, St Ives, Tracsis, Volta Finance Limited

QUARTERLY EX-DIVIDEND DATE
Investors Capital Trust 'A' Shares, Marsh & Mclennan Cos Inc., Primary Health Properties, SQN Asset Finance Income Fund Limited

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Consumer Credit (US) (08:00)
Continuing Claims (US) (13:30)
Initial Jobless Claims (US) (13:30)

FINALS
Alliance Pharma, Belgravium Technologies, NetScientific , PureTech Health , TyraTech Inc. (DI / REGS), Ubisense Group

IMSS
Dunelm Group

SPECIAL DIVIDEND PAYMENT DATE
Hiscox Limited (DI)

SPECIAL EX-DIVIDEND PAYMENT DATE
Headlam Group, JPMorgan Income & Capital Inv Trust, Lloyds Banking Group

AGMS
Glenwick, IPSA Group

TRADING ANNOUNCEMENTS
Marks & Spencer Group

FINAL DIVIDEND PAYMENT DATE
Hiscox Limited (DI), Rio Tinto

FINAL EX-DIVIDEND DATE
4Imprint Group, Aberdeen UK Tracker Trust, Amiad Water Systems Ltd, Amino Technologies, Asian Total Return Investment Company, Aukett Swanke Group , Aviva, BBA Aviation, Berendsen, British Smaller Companies VCT 2, Charles Taylor, Chesnara, Entu (UK) , esure Group, Fevertree Drinks, Fisher (James) & Sons, Fyffes, GKN, HGCapital Trust, Hikma Pharmaceuticals, IDOX, IMI, Integrated Diagnostics Holdings, International Personal Finance, Lloyds Banking Group, Maven Income & Growth 4 VCT, Melrose Industries, Mobeus Income & Growth 4 Vct, Murray International Trust, Pearson, Phoenix Group Holdings (DI), Rentokil Initial, Rexam, Rotork, Secure Trust Bank, St James's Place, Taylor Wimpey, Ultra Electronics Holdings, Vesuvius, Wood Group (John)