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All told, it’s been an interesting, surprising year for Marks & Spencer shares.

Opening at £2.45 in 2019, they got off to a fantastic start, rocketing above £3 for the first time in 3-months at the end of February, as speculation mounted that it was in discussions with Ocado over a potential joint venture.

Yet when investors got wind of the full details of that deal, they were less happy, the stock dropping nearly 13% on February 27th as the cost of the tie-up was revealed. The retail institution is investing a not insignificant £750 million in the joint venture – one that sees M&S replace Waitrose as Ocado’s main supplier – funded by a £600 million rights issue that’ll result in a 40% cut to the firm’s dividend.

Since that decline that stock hasn’t been able to get back to £3, at best striking £2.90 at the very start of May. Marks & Spencer shares now sit at a current trading price of £2.74.

Before all this, Marks & Spencer posted its third quarter update in January, a set of results that displayed the need for a substantial shake-up. For the 13 weeks to 29th December total UK sales were down 2.7%, with like-for-likes slipping 2.2%. This as comparable sales in the Clothing & Home division fell 2.4%, closely followed by a 2.2% decline in Food – especially disappointing given the reporting period covered the Christmas season.

As for Wednesday’s annual results, analysts are expecting pre-tax profit to tumble 10.7% to £519 million, against the £580.9 million managed the year previous. Of course, any comment on Ocado will be heavily scrutinised.

Marks & Spencer shares have a consensus rating of ‘Hold’ alongside an average target price of £2.75.

This article is brought to you in association with Spreadex. All opinions expressed in this article are from the author and do not necessarily represent the opinions of The Armchair Trader. You can find out more about Spreadex products and services here, or find more articles from Connor Campbell here.

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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Connor Campbell

Connor Campbell

Connor joined Spreadex in 2014 as part of a newly expanded financial analyst team after graduating from the University of Southampton with an MA in English. His focus is on providing Spreadex's customers with up-to-date and informative news, and is responsible for the market analysis found on the Spreadex website.

Connor produces three daily market updates, a daily stock earnings preview, a weekly financial market preview piece every Friday, a round-up of all the big financial stories making the weekend press every Monday morning and regular stock market features.

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