Marks & Spencer: on the right track, claims fund manager


Like-for-like sales at Marks & Spencer, rose 1.7%  in the 13 weeks to 2 July 2011, the retailer reported today.

Like-for-like general merchandise sales, comprising clothing, footwear and homewares, were flat, while food sales were up 3.3 %.

Commenting on the retailer’s performance, Paul Mumford, senior fund Manager at Cavendish Asset Management, said: “Overall, today’s figures from Marks & Spencer are pretty reasonable, with food sales in particular seeing welcome growth. Yet the numbers have slightly undershot market expectations, with the consequence we are seeing some profit taking this morning following a recent rise in the stock price and yesterday’s market falls, which left Marks & Spencer relatively unscathed at the time.

“The like-for-like sales figures look better than they perhaps are; the flat growth in like-for-like merchandise sales will have been distorted upwards by the inclusion of two weeks of the summer sale period, whilst the 3.3% growth in like-for-like food sales will in part be a dividend of the Royal Wedding and hot Easter weather. While it is spiriting to see a major British high street chain post overall like-for-like growth of 1.7 %, this may well have been flat or below had circumstances been less fortuitous.

“Nonetheless, the results broadly show a company that is doing the right things and headed in the right direction. The growth in online sales reflects its wise investment in its online service. It has gained market share for the 17th consecutive month, albeit through treading water in the face of suffering competition. Critically, it also seems that consumer confidence is marking a steady return.

“The current share price is attractively cheap thanks to the general downgrading of the retail sector by investors; Marks & Spencer is less vulnerable than most members of this sector and today’s price could be an attractive entry point on the medium to long term view, withstanding some potential bumps along the way.

“Though the sparks at Marks have yet to fly, it’s on the right track.”