MENU

Be Prepared For Marks and Spencer Group Plc’s Results

Marks & Spencer (LSE: MKS) (NASDAQOTH: MAKSY.US) is due to announce its half-year results on Tuesday next week (5 November).

The high street icon’s shares have out-performed the FTSE 100 over the past six months, having risen 14% compared with a 5% rise for the index.

How will M&S’s business have performed in the first half compared with last year? And is the company on track to meet forecasts for this year’s key full-year numbers? Here’s your cut-out-and-fill-in table!

  H1 2012/13 FY 2012/13 H1 2013/14 Forecast
FY 2013/14
Forecast
FY growth
Revenue (£bn) 4.70 10.03 ? 10.38 +3.5%
Underlying profit before tax (bn) 0.297 0.665 ? 0.672 +1.1%
Underlying earnings per share (EPS) 14.6p 32.7p ? 32.9p +0.6%
Dividend per share 6.2p Final: 10.8p
Total: 17.0p
? 17.6p +3.5%

Sales and profits

Analysts are forecasting a 3.5% rise in revenue for the full year. M&S has already told us that Q1 sales increased 3.6% (3.3% at constant currency), so watch for H1 revenue in the region of £4.86bn.

Continuing challenging trading conditions and promotional activity are reflected in the City’s forecasts for profit and EPS growth of around 1%. If H1 goes in tune with full-year expectations, we should be looking next week for profit before tax of about £0.3bn and EPS of about 14.7p.

Dividend

M&S shareholders have seen their annual dividend stuck at 17p for the last three years. However, analysts are forecasting a rise to 17.6p (+3.5%) this year.

Given the prevailing trading conditions, I’m expecting the board to declare an unchanged interim dividend of 6.2p next week, with any rise — if it does materialise — coming via the final dividend. If the board were to up the interim payout, it would send a very bullish signal to the market.

General merchandise

There hasn’t been much wrong with the performance of M&S’s food, online and international business segments, but weakness within general merchandise (clothing and homeware) has been letting the team down, as the table below shows.

General merchandise Q2 2011/12 Q3 2011/12 Q4 2011/12 Q1 2012/13 Q2 2012/13 Q3 2012/13 Q4 2012/13 Q1 2013/14
UK sales growth (%) -1.9 -0.8 -1.2 -5.1 +0.1 -2.2 -2.2 +0.5
Like-for-like UK sales growth (%) -2.5 -1.8 -2.8 -6.8 -0.8 -3.8 -3.8 -1.6

M&S shook up general merchandise a year ago. John Dixon moved across from food, backed up by a new style director, Belinda Earl, the ex-boss of Debenhams and Jaeger.

Do the latest Q1 numbers in the table above suggest Dixon and Earl are starting to turn general merchandise around? Keep an eye on the Q2 numbers for further evidence.

Finally, if you already own shares in M&S, and are in the market for other blue chips, I recommend you help yourself to the very latest free Motley Fool report.

You see, the Fool's top analysts have identified a select group of FTSE 100 companies they believe will generate superior long-term earnings and income growth. Such is their conviction about the quality of these businesses that they've called the report "5 Shares To Retire On".

You can download this free report right now -- simply click here.

> G A Chester does not own any shares mentioned in this article.