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Marks & Spencer still feeling the pain

Deutsche Bank is predicting a 28% year-on-year decline in pre-tax profits and expects them to come in at £206mln.

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Food is a major battleground for the retailer.

Less bad, but not good: That’s how one of the City’s leading brokers has described Marks & Spencer’s (LON:MKS) upcoming interim results.

Deutsche Bank is predicting a 28% year-on-year decline in pre-tax profits and expects them to come in at £206mln.

Weaker clothing sales and “softer trends in food” are likely to be the major drag on earnings, according to analyst Charlie Muir-Sands.

He is expecting M&S to update on the UK store estate, the group’s cost base and its international strategy.

“As we previously explored in ‘Dressing Down (a note published on May 27), we think it will be difficult to justify significant store closures, with better sales densities a more likely strategy,” the Deutsche stock picker said.

“The scale of opportunity in international is hard to gauge given limited country-level disclosure. In addition we will look for an update on post-Brexit plans to cope with higher input costs from full-year 2018.”

The analyst maintained repeated his ‘hold’ recommendation on the stock and 350p price target.

At 1.15pm, the shares were changing hands for 333p.

Of the 21 analysts polled by the Broker Forecasts site, ten have outright ‘sell’ recommendations on Marks’ stock, while four think it is fully valued with ‘neutral’ calls.

The consensus price target, meanwhile, has come down from 487p six months ago to 349p currently.

Marks & Spencer reports its first-half results on November 9.

Quick facts: Marks and Spencer Group PLC

Price: 111 GBX

LSE:MKS
Market: LSE
Market Cap: £2.17 billion
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