4 Essential Retail Stars For 2015 And Beyond: Marks and Spencer Group Plc, Sports Direct International Plc, Greggs plc And Ted Baker plc

Today I am looking at four high-street stars poised to enjoy stunning earnings growth in 2015 and stretching well into the future.

Marks and Spencer Group

After many years of operational difficulties, I believe that British retail institution Marks and Spencer (LSE: MKS) is on the cusp of a strong resurgence. Critically, the fruits of product revamps and changes to its Womenswear design team has seen clothing demand thrive in recent months and boost its sales outlook. On top of this, aggressive expansion into lucrative Asian markets, combined with the roll-out of its new website, looks set to boost the bottom line

Marks and Sparks is expected to follow earnings growth of 2% in the year concluding March 2015, to 32.8p, with a firm 10% uptick expected in the following year, to 36.1p. As a consequence an attractive P/E multiple of 14.5 times for this year — below the value yardstick of 15 times — falls to an even more appetising 13.1 times for fiscal 2016.

On top of this, Marks and Spencer’s bubbly growth outlook is also anticipated to get dividends rolling higher again after three consecutive annual holds at 17p per share. A total payment of 17.8p is pencilled in for this year, creating a chunky yield of 3.7%. And a further dividend hike next year, to 19p, pushes this to a generous 4%.

Sports Direct International

Sales at sportswear emporium Sports Direct (LSE: SPD) look set to keep surging well into the future as Britain’s demand for gymwear and football boots shows no signs of letting up. The firm’s suite of low-priced, in-house brands — which includes the likes of Dunlop and Lonsdale — should continue to fly off the shelves as shoppers’ appetite for bargains rolls on, while a rising exposure to niche pursuits like rock climbing is also paying off handsomely.

Sports Direct has seen earnings surge at a compound annual growth rate of 26.9% during the past five years, and City analysts expect this momentum to keep on trucking. Growth of 21% is currently predicted by City analysts in the year ending April 2015, to 37.2p. And an extra 15% advance is chalked in for 2016 to 42.7p.

As a consequence, Sports Direct trades on a reasonable-if-unspectacular P/E rating of 18.7 times for this year, although this dives to 16.2 times for 2016. And although the business is not expected to shell out a dividend any time soon, I believe that the firm’s terrific earnings prospects make it a strong portfolio filler.


Budget baker Greggs (LSE: GRG) has seen revenues jump in recent times, as shrewd product development and store refurbishments has attracted customers from higher-end coffee chains and cafes such as Starbucks and Pret A Manger. The success of its new coffee blends and sandwich ranges prompted the business to lift its profit guidance last month, and signs of further success in next month’s financial update could prompt another upgrade.

The number crunchers expect Greggs to punch earnings growth of 28% in 2014, to 40.3p, in turn creating a P/E rating of 17.6 times. And expectations of a further 7% improvement — to 43p — in 2015 drive this to 16.4 times.

On the back of this bubbly earnings outlook, the sausage roll specialists are predicted to lift the full-year dividend from 16.6p per share in 2013 to 20p in 2014, creating a tasty yield of 2.8%. And a predicted increase to 20.3p next year pushes the yield to 2.9%.

Ted Baker

At face value fashion house Ted Baker (LSE: TED) may not appear to provide terrific bang for one’s buck. But I believe that a backcloth of surging international sales — growing at a compound annual growth rate of 20%, a trend which analysts expect to continue until the end of the decade at least — boosted by its excellent brand and rolling store roll-outs both at home and abroad should continue to keep group earnings expanding well into the future.

Ted Baker currently changes hands on an elevated P/E multiple of 27.4 times for the year concluding January 2015, prompted by an excellent 18% improvement in the further line, to 81.6p. But a further 17% increase for fiscal 2016, to 95.4p, pushes this to a far more palatable 23.4 times.

And Ted Baker also offers up a solid dividend this year and next, according to current forecasts. Indeed, the total payout is anticipated to surge from 33.7p in fiscal 2014 to 40.6p in 2015, producing a decent 1.8% yield. And an extra rise to 47.1p next year pushes this to 2.1%.

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