Marks and Spencer Group PLC (LSE:MKS) may face depleted pre-tax profits in its upcoming full-year results, due to be published on Wednesday, 24 May, according to Barclays analysts.
Pre-tax profits for 2022/23 should come in around £430mln, analysts noted, marking an 18% decline compared with the 2021/22 financial year’s £523mln.
However, Barclays added that “technical” factors should be considered, including a £60mln boost from Business Rates Relief in 2021 and the company’s exit from Russia following the outbreak of war in Ukraine.
“Adjusting for all the ‘technical’ issues, we think our forecast implies a decline of [around] 2% in profit before tax,” the bank added.
“This may not look great in the context of strong sales growth but makes more sense in the context of the jump in operating expenditure”, including higher energy and labour costs.
Looking ahead, Barclays said M&S’s outlook will be “crucial” and predicted a lower margin on clothing and home products, continued headwinds from energy costs, but an increased share in Ocado’s profit.
Barclays gave M&S an ‘overweight’ rating, alongside a share price target of 200p, up 21.5% on Friday’s opening.
Hargreaves Lansdown analyst Susannah Streeter was more optimistic about the results, suggesting the retailer’s strategic transformation should show signs of improvement, though CitiGroup predicted worsening demand.