10th Nov 2021. 11.13am
Regency View:
Marks and Spencer (MKS) Half-Year numbers in focus
M&S shares jump after upbeat profit forecast
It’s been a good week for UK retailers with M&S and Primark owner Associated British Foods (ABF) surging higher on strong trading updates…
M&S released their half-year numbers this morning – reporting pre-tax profits of £187m in the six months to October 2, up 18% from the same period a year ago.
The icon British brand said that full-year profits, before tax and adjusted items, would be in the “region of £500m” – ahead of expectations thanks to an improved performance from its food business.
Food sales during the half-year were 10% ahead of the equivalent pre-Covid period, generating £269m profit. While clothing and home sales were 1% lower, but profits almost doubled to £156m.
However, it wasn’t all good news with M&S warning of labour and product shortages as the economy starts to revive after the pandemic.
Commenting on the numbers, CEO Steve Rowe said:
“Given the history of M&S we’ve been clear that we won’t overclaim our progress”…
“But thanks to the hard work of our colleagues it is clear that underlying performance is improving . . . the hard yards of driving long-term change are beginning to be borne out in our performance.”
Technicals
The market has responded in bullish fashion to this morning’s numbers as the shares gapped higher – taking prices back within touching distance of thier pre-pandemic highs (see daily candle chart).
However, we are already seeing prices starting to retreat intra-day, and this signals today’s large gap may signal short-term buying exhaustion.
Hence we would favour being patient and waiting for prices to pullback and close the gap before considering M&S as a buy.
MKS Daily Candle Chart
MKS Weekly Candle Chart
Disclaimer:
This research is prepared for general information only and should not be construed as any form of investment advice.