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| Marks & Spencer results: what the analysts say | Marks & Spencer results: what the analysts say |
| (about 2 hours later) | |
| Freddie George, Cantor Research | Freddie George, Cantor Research |
| We have a number of concerns with the new strategy on womenswear: | We have a number of concerns with the new strategy on womenswear: |
| 1) It will, in our view, take time before the new womenswear ranges resonate with customers and possibly up to three seasons before we see any material upside to GM LFLs. | 1) It will, in our view, take time before the new womenswear ranges resonate with customers and possibly up to three seasons before we see any material upside to GM LFLs. |
| 2) It will also take time to attract the younger, freer spending consumers. M&S's core customer has got older, has become more used to sporadic promotional activity and has become more focused on price rather than value for money. | 2) It will also take time to attract the younger, freer spending consumers. M&S's core customer has got older, has become more used to sporadic promotional activity and has become more focused on price rather than value for money. |
| 3) The new plan, we believe, will have cost implications which could potentially involve store refurbishments, a re-branding exercise and an increase in marketing costs. | 3) The new plan, we believe, will have cost implications which could potentially involve store refurbishments, a re-branding exercise and an increase in marketing costs. |
| Independent retail analyst, Nick Bubb, | Independent retail analyst, Nick Bubb, |
| Well, if M&S made "strong progress" the last financial year, despite the disappointing profit setback, we are tempted to wonder how it will describe a year when it actually produces some modest profit growth. | Well, if M&S made "strong progress" the last financial year, despite the disappointing profit setback, we are tempted to wonder how it will describe a year when it actually produces some modest profit growth. |
| Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers | Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers |
| Three years into its transformation plan and investors are still being asked for patience. Profits have fallen, including at the strategically targeted international business, whilst the dividend remains unchanged. The store format continues to be adjusted, whilst significant hope now rests with its new Autumn/Winter clothing ranges. | Three years into its transformation plan and investors are still being asked for patience. Profits have fallen, including at the strategically targeted international business, whilst the dividend remains unchanged. The store format continues to be adjusted, whilst significant hope now rests with its new Autumn/Winter clothing ranges. |
| That said, the performance does come against ongoing unseasonal weather, whilst the size of the task taken on by Mr Bolland should not be underestimated. The group is finally moving convincingly into the digital age, while its food business remains a huge positive, given the trend for pressured consumers to reward themselves with premium food. | That said, the performance does come against ongoing unseasonal weather, whilst the size of the task taken on by Mr Bolland should not be underestimated. The group is finally moving convincingly into the digital age, while its food business remains a huge positive, given the trend for pressured consumers to reward themselves with premium food. |
| In all, a cut in group investment spending going forward does look to signal some management confidence in the outlook, with the foundations having been built, whilst the numbers themselves are at least in line with forecast. For now, and with some optimism for the future expressed in a 30% gain in the share price over the last year, analyst opinion currently denotes a hold, albeit a strong one. | In all, a cut in group investment spending going forward does look to signal some management confidence in the outlook, with the foundations having been built, whilst the numbers themselves are at least in line with forecast. For now, and with some optimism for the future expressed in a 30% gain in the share price over the last year, analyst opinion currently denotes a hold, albeit a strong one. |
| Bryan Roberts, Kantar director of retail insights | Bryan Roberts, Kantar director of retail insights |
| The slump in profitability was well-flagged and comes as precious little surprise, but this fact does little to dispel the gloom surrounding the general merchandise side of the business. Positivity surrounds food and the longer-term multichannel building blocks being put in place, but we retain concerns that the feted autumn/winter clothing range will not be the silver bullet that some hope it might be. Material improvements in merchandising and marketing are necessary for the undoubtedly improved ranges to generate the maximum possible benefit for M&S. | The slump in profitability was well-flagged and comes as precious little surprise, but this fact does little to dispel the gloom surrounding the general merchandise side of the business. Positivity surrounds food and the longer-term multichannel building blocks being put in place, but we retain concerns that the feted autumn/winter clothing range will not be the silver bullet that some hope it might be. Material improvements in merchandising and marketing are necessary for the undoubtedly improved ranges to generate the maximum possible benefit for M&S. |
| John Ibbotson, director of consultants Retail Vision | John Ibbotson, director of consultants Retail Vision |
| More dismal numbers from M&S. For too long now it has been the same old story, namely general merchandise struggling, food just about keeping the retailer afloat. Increasingly, M&S seems like a rabbit in the headlights. However many operational improvements it makes, it's all immaterial unless the retailer can rediscover its panache. It's make or break time at M&S. Despite its restructuring, overhaul of IT and logistics, and continued strong food sales, it's all in vain if clothing sales don't improve by Christmas. | More dismal numbers from M&S. For too long now it has been the same old story, namely general merchandise struggling, food just about keeping the retailer afloat. Increasingly, M&S seems like a rabbit in the headlights. However many operational improvements it makes, it's all immaterial unless the retailer can rediscover its panache. It's make or break time at M&S. Despite its restructuring, overhaul of IT and logistics, and continued strong food sales, it's all in vain if clothing sales don't improve by Christmas. |
| Peter Saville, partner at advisory and restructuring firm Zolfo Cooper | |
| M&S has repeatedly tried and failed to reinvigorate its fashion offering and appeal to a younger audience. Strong food sales have not been enough to offset the weak performance of its clothing range. Bolland's future with the retailer is likely to depend on whether the current efforts to turn the retailer around pay off. | |
| Initial signs for this latest revamp are encouraging. However, M&S is a large and difficult ship to turn and in the current conditions on the high street, any upturn in sales is hard to come by. |