25 May 2022
If you are covering Marks & Spencer’s latest results, please find below a comment from Mamta Valechha, equity research analyst at Quilter Cheviot:
“M&S provided a mixed update this morning, and unsurprisingly cautioned on the consumer outlook, which will serve as a reminder the pressures facing UK consumers.
“Results were slightly better in the UK Clothing and Home at the revenue level and strong at the operating profit level, as M&S benefited from an increase in sales growth, combined with an increased full-price sales mix. However, in food, the group saw a saw a normalisation of basket sizes and which impacted profit levels.
“However, the key focus on today’s statement is the outlook and any indication of the health of the consumer. While current trading is ahead of comparable periods last year (non-essential retail reopened) in both Food and Clothing, M&S stated that customers’ spending capacity is under pressure. They expect these pressures to increase as the year progresses and expect the impact of declining real incomes to sharpen in the second half and endure for at least the remainder of the financial year. There is no current sign of inflation abating, although they believe the rate of cost growth will subside by the third quarter.
“The group currently sees no progression on profit for FY23, which is already at a lower base than the year that just went, and implies a low to mid-single digit cut to estimates.”
