Wednesday preview: Investors eye M&S full year results

Marks & Spencer’s struggling clothing division comes under the microscope on Wednesday when the retailer reports its full year results.

Numis expects annual pre-tax profit of £678m compared to consensus forecasts of £670m and the previous year’s £661m, supported by an improvement in margins at the general merchandise (GM) unit.

The broker sees GM gross margins rising 240-250 basis points, with reduced promotional discounting offset by more stock into sale.

“We look forward to the first results presentation from new CEO Steve Rowe, expecting another ‘evolution not revolution’, and, although we continue to see the visible benefits that the bought-in gross margin gains and reduced capex profile should provide to earnings and cash flow respectively, we remain unconvinced that the trading trend in the GM division can be easily reversed and remain neutral,” said Numis analyst Andrew Wade.

In April M&S reported same store GM sales declined 2.7% in the fourth quarter, although this was better than a 3.5% fall anticipated by analysts and an improvement on the 5.8% slump during the third quarter.

Rowe - who was previously M&S executive director of general merchandise and took over from Marc Bolland in early April - said the performance was “unsatisfactory” and that reviving the clothing and homeware business “is our number one priority”.

Meanwhile, same store food sales were flat during the last quarter, missing estimates for a 0.5% increase.

Wednesday 25 May

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