Marks & Spencer slides on JPMorgan downgrade

The bank said it expects another quarter of negative like-for-like performance from M&S in General Merchandise and it’s also concerned that LFL growth in the food business is becoming harder to achieve.

“Whilst we continue to like the self-help story and see the potential for ongoing gross margin gains, we do think that M&S has less opportunity to reduce opex growth guidance than in previous years.”

This, combined with ongoing pressure on International profits led JPM to downgrade its full-year pre-tax profit estimate for 2016 to £666m from £706m.

It said this leaves the bank 6% below Bloomberg consensus and implies only 1% pre-tax profit growth in 2016, versus its forecast for 6% growth at Next.

JPM added that the new target price offers only 6% upside to the current share price.

At 0935 BST, Marks & Spencer shares were down 2.9% at 504.50p.