Morningstar

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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About the Author

Ioannis Pontikis, CFA

Director of Equity Research in Europe
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Ioannis Pontikis, CFA, is a Director of Equity Research in Europe for Morningstar*. He covers European grocers and global food and beverage companies like Tesco, Unilever, Nestle, and Danone, and manages a team of eight analysts across the Financials and Consumer sectors. He also leads Morningstar’s Equity Research Valuation Committee, advancing the firm's valuation methodology through projects such as developing new methodologies, refining our valuation model, and enhancing the efficacy of our ratings.

Before joining Morningstar in 2017, Pontikis spent six years on the buy-side, co-managing a $100M long/short equity fund and leading teams in applying machine learning to stock and equity factor selection models. He developed the fund's valuation and risk assessment framework, achieving strong risk-adjusted performance. Prior to this, Pontikis worked at Nestle S.A. in Athens, focusing on financial reporting, budgeting, and auditing proposals to improve processes.

Pontikis research has appeared in numerous media outlets including Bloomberg, CNBC, Reuters, Guardian, Frankfurter Allgemeine Zeitung among others.

Pontikis holds a bachelor’s degree in business administration from the University of Piraeus’s and a master’s degree in accounting and finance from the London School of Economics. He also holds the Chartered Financial Analyst® designation and studying towards an advanced post-masters degree in portfolio and risk management.

* Morningstar Holland BV (“Morningstar”) is a wholly owned subsidiary of Morningstar, Inc

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