Marks and Spencer Group Plc, WH Smith Plc And Debenhams Plc Are Leading The Retail Charge

The retail business bore the brunt of the crisis-led spending slowdown, but some of our best-known high street names have put in a very strong November ahead of the Christmas rush.

Marks & Spencer

Marks & Spencer (LSE: MKS) shares have put on 27% since 13 October to reach 489p, and in 2014 so far they’re up 14% against a FTSE 100 that has been flat.

The big boost came from a first-half update on 5 November showing a 1% rise in total sales to £4.9bn with underlying pre-tax profit up 2.3% to £268m. Chief executive Marc Bolland told us that “M&S delivered sales growth and increased profit in the first half despite a tough market, particularly in September“, suggesting things are getting better as the year progresses.

M&S upped its full-year gross margin guidance from +100bps to between +150 and +200bps, and now expects a change in operating costs of +3.5% from an earlier +4%.

WH Smith

WH Smith (LSE: SMWH) benefited from its niche travel locations to produce a 9% rise in pre-tax profit to £112m and a 15% rise in EPS to 79p for the year ended August 2014.

That was reported on 16 October, and launched a bull run that has taken the shares up 27% so far to reach 1,261p. There’s been a 25% overall gain so far in 2014 after a lacklustre prior ride.

We’ve now seen five straight years of EPS rises, and there’s another 8% forecast for 2015, putting the shares on a forward P/E of 15 with a predicted 3.1% dividend yield. Those are around the FTSE average, which looks good for a strong company.


Debenhams (LSE: DEB) shares have had the weakest year of the three, dropping 23% to a low point in early October. But since then we’ve seen a 25% surge to 71.6p to pull the performance in 2014 to a modest 4% drop.

Debenhams recorded a fall of 20% in underlying pre-tax profit for the year ended 30 August, but that was in line with expectations. And we saw total sales up 1% with gross transaction value up 1.7%, suggesting we could be heading for better times. Net debt improved and the full-year dividend was maintained at a yield of 5.1%, with chief executive Michael Sharp pointing to “the challenges we faced in the first half” having been countered by a better second half.

With the shares on a forward P/E of only 9.5 and the dividend forecast to be lifted a little in 2015 as earnings recover, Debenhams could be one to watch.

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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.