Sun and self-help lift Marks & Spencer trade

UBS increased its forecasts for 2008/09 – for which Marks & Spencer will issue results on May 19 – from £585m to £610m and for the current year by £60m to £485m.

The upgrade followed Marks & Spencer executive chairman Sir Stuart Rose’s comments that although it is too early to talk of green shoots, there are signs of improved stability since Christmas. UBS said TNS data indicated that self-help measures were apparently having an impact on food performance and recalled the better than feared fourth-quarter update.

However, the broker cautioned: “In absolute terms, Marks & Spencer will benefit from these trends and possibly from a stronger April. What it won’t do – for now – is offset concerns that Marks & Spencer market share and gross margins are still declining. If some of the pain expected in 2009 has been simply kicked into 2010 then Marks & Spencer could struggle further out.”

Following a store visit last week, broker Singer also believed self-help and good weather “could mean Marks & Spencer is trading slightly better than expected”.

The broker noted that seasonal clearance was limited to “small areas” of the shop and that there was “a sense that incremental improvements are coming through” in categories such as footwear, home and childrenswear.

Singer believed that “sales assumptions could be too negative”.