Results round-up

Construction group Galliford Try said its full year profits would be at the upper end of analysts forecasts of £46m - £59m although it sounded a note of caution about political uncertainty in the UK after June's General Election.

In a trading update, the company said its Linden Homes and Partnerships & Regeneration units were expected to deliver increased revenue and improved operating margins, while newer contracts in Construction were performing well.

The group's outlook for full year 2018 was unchanged. Linden Homes is expected to deliver further volume growth and improvement in the operating margin.

"Partnerships & Regeneration continues to enhance its position to benefit from the demand for affordable housing, while Construction's margin is expected to increase as we close out legacy positions," the company said.

Chief executive Peter Truscott said the failure of the Conservative Party to secure a majority at the last General Election had created some concerns about the medium-term outlook for the macro economy.

"However, all three businesses have clearly defined plans to improve operating efficiency and grow revenue and margins, providing the group with confidence in its ability to deliver a strong performance even in a period of lower growth in the wider economy," he said.

"We enter the financial year with a group order book of £4.9bn, giving us a solid foundation to deliver growth in full year 2018."

Marks & Spencer's struggles continued into its new financial year, with like-for-like sales remaining negative in the first quarter as the retailer reined in discounting against an unforgiving market backdrop.

LFL clothing and homeware sales fell 1.2% in the 13 weeks to 1 July and food sales were down 0.1%, dragging UK LFL sales to 0.5%.
This was despite a benefit from the week before and after Easter both falling within this year's period but not last year's, calculated to have increased food
LFL growth 0.7% and general merchandise by around 0.6%.

However, total UK sales benefitted from store openings to rise 2.6%, lifting group sales to 2.7%, or 1.8% without any boost from currency moves as international sales rose 3.8%.

A year and a half after ascending to the top job, chief executive Steve Rowe's restructuring work continues, having last year reported a 64% plunge in profits on modest revenues growth of 0.6%. On Tuesday he was due to face investors at the company's annual meeting, held at Wembley Stadium.

In the trading statement, Rowe maintained first-quarter trading was "in line" with his expectations and that "we are on track" with delivery of the restructuring plan unveiled last year and left full year guidance unchanged.

"I am pleased that we continue to grow full price sales in Clothing & Home, with reduced discounting and no clearance sale in the quarter. In our Food business, we delivered strong growth from new Simply Food openings, and are prioritising better ranging and stronger promotions."

Rowe's plan involved an international retreat, which has so far seen 28 overseas stores closed out of 53 stores in the markets it plans to exit, and more of a focus on opening UK food-only stores.

While LFL sales in food stores fell 0.1% amid the cutthroat grocery market, on a total sales basis food sales were up 4.5%, thanks to new outlets being opened.

In clothing, a key tenet of the plan has been to cut back on discounting, with the quarter seeing revenue down 0.5% in line as full price sales were up roughly 7% the number of promotions was reduced and there was no clearance sale in the quarter compared with one last year.

"We start our summer sale today, a week later than last year, with terminal stock for the season significantly down," Rowe added.

REACTION AND ANALYSIS

Shares in M&S fell 1.3% in early trade on Tuesday.

Independent retail analyst Nick Bubb pointed out that ahead of the update "the jungle drums were beating that Clothing LFL sales were likely to be 'only' about 1.0% down and, so, despite the desperately soft comps, the bulls will be pleased to see that Clothing and Home sales were indeed only 1.2% down" - though adjusting for Easter the fall was 1.8%.

As for food, he said bearish investors will seize on the 0.8% fall in Easter-adjusted LFL sales as evidence of cannibalisation caused by all the Simply Food store openings.