M&S is a “buy” after better-than-expected results, says Share Centre

5th November 2014

The Share Centre is recommending Marks and Spencer as a ‘buy’ as its first half results beat expectations.

The shares rose 33p to 437.8p on Wednesday.

Half-year pre-tax profit fell 0.4% to £279.4m, but underlying profits rose 2.3% to £267.6m which was ahead of expectations.

The retailer said that a warm September had affected sales.

Its website was relaunched in February and online sales were down 4.6% in the second quarter, but this was an improvement on the 8.1% drop it reported in the previous quarter.

The Share Centre said that its forward  of price to earnings ratio of 11.3 and a healthy dividend yield of 4.7% look attractive

Ian Forrest, investment research analyst at The Share Centre, said: “The market welcomed Marks & Spencer’s first half results today as it beat expectations with a 2% rise in underlying pre-tax profits and raised the interim dividend.

“Like many other retailers, the company was affected by the warm weather in September and as a result saw sales slowdown in Q2, compared to Q1. Clothing and general merchandise saw like-for-like sales drop 3.4% and 4% respectively, but food sales stayed in positive territory and full-year guidance remains unchanged.”

Forrest added: “We recommend Marks and Spencer as a ‘buy’ for investors. Given the current difficult trading backdrop across the retail sector, these are very solid results and show that the recovery story at M&S is still very much on track.

The forward price PE of just 11.3, which is relatively low compared to its peers, alongside a very healthy dividend yield of 4.7% means the shares are attractive for investors.”

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