New Marks & Spencer (MKS) CEO Steve Rowe avoided a baptism of fire this week, but his task remains unenviable as food growth flatlined and general merchandise sales continue to fall.
M&S shares jumped 3.8% to 436.2p on Thursday morning - touching the highest level since early January - as it delivered a fourth quarter trading update that beat low expectations.
City observers had expected general merchandise to be down by 3%-plus, but the division’s sales came in 2.7% down like for like and 1.9% down on a reported basis. Its food business continues to outperform the market with 4% growth driven by 80 new stores, but like-for-like sales dropped to 0% when analysts had been expecting a 0.5% rise.
JP Morgan Cazenove welcomed the “better than feared” GM update, but cautioned: “In the food business, underlying like-for-like sales (excluding the boost from the timing of Easter) fell into negative territory for the first time since 2010. This could raise concerns.” Shore Capital shrugged off the food decline: “It is important to retain a sense of perspective to the extent that M&S, aided by new space, is demonstrably and sustainably outperforming the UK grocery market”.
Premier Foods’ (PFD) shares were boosted late on Wednesday by an update to the market that it has held “constructive” talks with its US suitor McCormick. The shares ended Wednesday 5.4% higher at 58.5p - still some way below McCormick’s 65p per share approach - on the news it had talked with McCormick and planned to meet key institutional investors over the coming days. City speculation has suggested Premier might be prepared to do business at 70p per share.
Ocado (OCDO) shares tumbled from above 400p to below 230p late last year as the City was perturbed by its lack of progress at signing a crucial international deal. The shares shot up 13.5% by close of play on Wednesday, on rumours it is in talks with Publix Super Markets, which operates in the South West of the US. The shares lost some of their lustre on Thursday morning, but remain near their highest level since mid-December.
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