Marks and Spencer Group PLC (LSE:MKS) interim results were seen as generally ahead of expectations by analysts, with profits beating expectations after a £100 million in cyber attack insurance proceeds.
Food performed well, but Clothing & Home continued to lag, particularly online, while the outlook commentary was cautious, with guidance for H2 profit to be “at least” in line with last year, seen as broadly reassuring.
Cost-saving targets were increased to £600m. Peel Hunt and DB noted valuation looked full after recent share price gains, and UBS flagged investor focus shifting to H2 execution, particularly amid ongoing consumer uncertainty and margin pressures.
Peel Hunt said the results were "predictably difficult to decipher, but the knee-jerk reaction is that it is where the market expected and the guidance is towards consensus".
Deutsche Bank felt it was "always going to be a difficult print" for M&S, given the cyber attack, but the timing of the insurance proceeds allowed a headline beat, with PBT at £184 million ahead of consensus forecasts of £111 million.
"A more comparable number may be £84 million, which was a slight miss and largely related to more gross margin pressure in Food."
Deutsche noted that it is taking longer than expected for Clothing sales to recover, given there is still excess inventory from spring/summer to clear through, but this should be done by Q4."
M&S management are holding a capital markets day next week, where Deutsche said the focus will reiterate on the mid-term and perhaps with more details on the higher clothing inventory and how long it takes to clear.
"The investment case has not changed. Largely, the business is back on track but given the shares have recovered recently to trade on c.12.5x Cal 26 PE, we may see a small pullback but this offers an opportunity to revisit."
UBS felt initial reactions "show concern on H2 outlook" given that the City consensus was looking for PBT growth of 10% in the rest of the year, "although given the strong H1 PBT we don't expect downgrades".