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Marks & Spencer: Strong Trading Update and Upbeat Profit Outlook, but Uncertainties Remain

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Securities In This Article
Marks & Spencer Group PLC
(MKS)

Marks & Spencer MKS released a short ad hoc trading update for the first 19 weeks of the year (ended Aug. 12, 2023) reporting “continued market share growth” in both the clothing & home and food businesses. More specifically, like-for-like food sales grew over 11% while clothing & home sales were up over 6% with strong growth in stores and lower-than-expected stock into sale. Consequently, group operating margin has continued to be robust with the company now expecting profit growth in the year and the interim results (interim results will be reported on Nov. 8, 2023) to show “significant improvement against previous expectations.” That said, Marks & Spencer remains cautious for the rest of the year as the economic outlook remains uncertain.

We do not expect to materially change our GBX 185 per share fair value estimate after this announcement. Shares trade in 3-star territory.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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Ioannis Pontikis

Senior Equity Analyst
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Ioannis Pontikis, CFA, is a senior equity analyst for Morningstar Holland BV, a wholly owned subsidiary of Morningstar, Inc. He covers European food retail and food ingredient companies such as Tesco, Carrefour, Associated British Foods, and Chr. Hansen.

Before joining Morningstar in 2017, Pontikis spent more than six years at Athens-based value shop SilentSeas, where he worked as a generalist covering small caps and focused on deep-value situations, particularly in companies owning hidden, undervalued assets. Prior to that role, he worked at Nestle as a financial analyst and at Ernst & Young as a consultant.

Pontikis holds a bachelor’s degree in business administration from the University of Piraeus and a master’s degree in finance from the London School of Economics. He also holds the Chartered Financial Analyst® designation.

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