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Can Marks & Spencer share price return to its 2022 peaks?

Marks and Spencer store front

At the start of 2022 British multinational retailer Marks and Spencer (M&S) share price hit a two and a half year high of 263p, before sliding sharply to 92p and a two-year low last October.

The company's full year results for the 52 weeks ended 2 April 2023 are expected to be released on 24th May 2023, with further progress expected to be made in the performance of both its businesses.

The shares are well below the peaks we saw early last year as markets took comfort from the benefits of the turnaround plan that was started by previous CEO Steve Rowe, and that has been carried on by new incumbent Stuart Machin, with both food and general merchandise performing well.

Since those October lows of 91.70p the shares look set to be well on course to recover 50% of the losses seen since the 2022 peaks.

At the start of this year the company reported Q3 numbers that were broadly better than expected despite tough trading conditions.

Total food sales rose 10.2%, while on a like for like basis rose 6.3%, as the food business grew its share of the grocery market, and looks set to continue to do so, with plans to open 20 new shops this year and refurbish a lot of their existing stores. 12 of these new shops will be food halls with wider aisles and are expected to open next year.

The completed acquisition of Gist in September last year will help in terms of streamlining costs through its food supply chain, and help boost margins there, with an expectation that this will save £50m in costs over 4 years.

More importantly clothing sales also saw decent growth of 8.8%, and 8.6% on a like for like basis, and according to management achieved over 10% market share during the period, the best level since 2015.

Total group sales came in at £3.6bn, a rise of 9.9%.

Click and collect orders saw a big increase of 20% helped in some part by the Royal Mail strikes as customers collected their own parcels.

Despite the strong Q3 performance management maintained their full year guidance perhaps mindful that Q4 could see a slowdown after a strong Q3.

Consensus forecasts for full year revenue is expected to see an increase of £880m, to £11.7bn, up from £10.9bn last year, with the food business expected to generate £7.1bn and general merchandise £3.6bn, although profits before tax are forecast to see a modest decline due to higher costs.

 


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