Analysts provided mixed reaction to the trading update from High Street bellwether Marks & Spencer Group PLC (LON:MKS) today, which showed the food business performing well but weighed down by clothing.
Nevertheless, shares in the retailer were up 1.52% to 426.80p in early deals.
New chief Steve Rowe said the performance in the final quarter was mixed.
Our Food business once again outperformed the market by c.3.5% pts. Although the sales decline in Clothing and Home was lower than last quarter, our performance remains unsatisfactory and there is still more we need to do."
Laith Khalaf at Hargreaves Lansdown noted:"Marks and Spencer now takes £1 out of every £25 spent on food in the UK, putting it in the same basket as players like Aldi, Lidl and Waitrose.
"This is testament to how well their food business has grown, with 80 new stores opened over the last year."
Khalaf also notes the strong growth in online sales was encouraging, but that "this bright light does serve to highlight quite how gloomy things are on the shop floor".
Mike van Dulken at Accendo Markets, said: "Comparable food sales remain under pressure (zero growth), international sales also outperformed domestic and and it looks like currency pressure in Europe will have taken its toll on FY group margins.
"But hopes appear high that a bottom has been seen and that new leadership and strategic change (better focus?) can help the shares maintain their recovery course. All eyes on the earnings and strategy update next month No pressure Steve!"
Respected retail analyst Freddie George at Cantor repeated his ‘sell’ stance as he said M&S would continue to struggle.
“We believe history will show that Steve Rowe, who was appointed chief executive at the beginning of April, has inherited a business that has pulled out the ‘kitchen sink’ to improve its profits over the last three years.
“Gross margins on general merchandise…are likely to consolidate at best while there are no easy remedies to drive sales."
Elsewhere in broker world, heavyweight Deutsche is upbeat on Synthomer PLC (LON:SYNT), punting the target up to 425p from 370p and repeating a 'buy' on the polymer distribution firm, which is due to print an interim management statement (IMS) on April 28.
"We expect a good Q1 IMS driven by better operating results in Asia (improved volumes, better unit margins) while we expect Europe to remain broadly stable," the broker noted.
It includes the Hexion PAC acquisition from mid-2016 and reckons this deal to be EPS accretive in its first full year.
"The deal is logical as it increases exposure to high growth US and Asia market with strong business complementarities. We expect further acquisitions to fulfil mgmt’s ambition to double the EBITDA of company (from £125m in 2015) and increase exposure to North America (Hexion has 17% of sales with Synthomer c5%)," it added.
Big cap miners were also a focus today and JP Morgan Cazenove lifts the target price on Rio Tinto (LON:RIO) to 2,000p from 1,850p previously. The rating is a repeated 'overweight'.
The same broker upgrades Anglo American (LON:AAL) to 450p from 250p previously but repeats an 'overweight' rating.
Meanwhile, Acacia Mining (LON:ACA) has an 'outperform' stance repeated by Credit Suisse and the target price is lifted to 300p from 265p. The bank also lifts its rating on Randgold Resources (LON:RRS) to 6700p from 6400p previously.