 No let-up for beleaguered M&S
(China Daily)
Updated: 2008-07-04 07:45
Marks & Spencer Group Plc, the United Kingdom's biggest clothing retailer, extended Wednesday's record decline in London trading as analysts cut their ratings on the stock and reduced their earnings estimates. Marks fell as much as 4.4 percent, its sixth straight daily drop, after losing almost a quarter of its value on Wednesday. Goldman Sachs & Co lowered the stock to "neutral" from "buy", while Investec Securities moved to "hold" from "buy". The London-based retailer on Wednesday said same-store sales dropped the most since 2005 and ousted its top food executive as a slump in UK consumer spending worsened. Executive Chairman Stuart Rose said he expects the slowdown to last two years. The stock has declined 58 percent this year, making it the second-biggest faller in the FTSE 350 General Retailers Index. "Senior management credibility has been undermined both by the disappointing trading news and the extent of reductions to consensus profit estimates," analysts led by Tony Shiret at Credit Suisse in London said in a note. He lowered his pretax profit estimates by 17 percent for this fiscal year and 33 percent for the year after. The stock fell as much as 10.5 pence to 229.5 pence and traded at 234.75 pence at 11:27 am in London. A close at that price would be the lowest since March 23, 2001. Wednesday's drop was the steepest since 1988. Food sales Marks, which gets almost half its revenue from food, faces increased competition on price from Tesco Plc, Wal-Mart Stores Inc's Asda and J Sainsbury Plc as customers rein in spending to cope with higher household bills. Food sales at stores open at least a year fell 4.5 percent in the 13 weeks ended June 28, the steepest drop since at least 1998, the company said. Rose said he expects other UK retailers to follow in saying they are experiencing tougher conditions. Goldman cut its estimate of pretax profit for fiscal 2009 by 34 percent to 577 million pounds and reduced its 2010 forecast by 47 percent to 430 million pounds, the brokerage said in a note yesterday. Investec now expects pretax profit of 725 million pounds for fiscal 2009 and 820 million pounds for the following year, down 23 percent and 21 percent, respectively. Agencies (China Daily 07/04/2008 page16) |
