Retailer Marks & Spencer (MKS) reported ‘solid’ Christmas sales thanks to strength in its Food business which offset a weaker performance in Fashion, Home & Beauty.
Food sales rose 6.6% to £2.72 billion, in addition to which Ocado Retail – which M&S owns 50/50 with Ocado Group (OCDO) – posted sales of £843 million.
In contrast, Fashion, Home & Beauty revenue dipped 2.5% to £1.27 billion due to clearance sales to make way for new season lines.
Chief executive Stuart Machin insists the business is ‘laser focused’ on future growth with more innovation in Food and better quality and value in Fashion.
| Price: 339.6p +3.4% | P/E: 17x |
| Market Cap: £6.8bn | Yield: 1.4% |
We were hoping M&S would deliver over Christmas and it has, which is why the shares are up while shares in Tesco (TSCO) and Associated British Foods (ABF) are down.
Food is now the biggest part of the business and the firm’s ability to keep generating growth ahead of the wider market is impressive.
Just as impressive is the performance of Ocado Retail, which has increased sales by double digits each month for the last year and is a new growth ‘engine’.
In terms of valuation, the shares aren’t expensive on a cyclically-adjusted P/E basis and as long as management continue to execute there is more upside to come.
Read the press release here: https://corporate.marksandspencer.com/investors
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