Shares in Marks and Spencer were slightly down in morning trade today (23 december) after Seymour Pierce predicted that the UK retailer could be in for a tough Christmas.
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Seymour Pierce cut its profit outlook for the company by 3.25 pence (US$0.048) per share to 217.5 pence per share, predicting that M&S will issue a gloomy Christmas trading update in January.
“This will be the worst Christmas for many years,” Seymour Pierce analyst Freddie George warned in a research note.
“The weak sales trend and the intense discount activity will continue well beyond January 2009, and will lead to a further step down in 2009/10 profit forecasts. The retailers will also be impacted by a stronger dollar as well as pension and supplier credit concerns. More worrying, looking ahead, as in previous cycles, it will take time, in our view, for the retailers to rebuild profitability from these lower levels,” he continued.
“January 2009 is likely to be a re-run of January 2008 with the year beginning with a profits warning from M&S, followed by a decline in the sector and a late recovery towards the end of the month. 2009 will, in our view, be much more of a trading market with some measure of confidence returning during the year,” George cautioned.
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By GlobalDataSeymour Pierce set a sell rating on M&S, predicting disappointing profits, a cut in the 2008/9 dividend and increasing issues with debt covenants.
Shares in M&S fell 0.9% this morning, dropping to 218.75 pence at 11.42am (GMT).
