Marks & Spencer Group Share Forecast January 2022 – Time to Buy MKS?
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Shares of major British multinational retailer Marks & Spencer Group (LSE: MKS) are in the green today, currently trading at £262.1 at the time of writing. Marks & Spencer shares have risen by 35% and are now up by 77% over the last year.
Marks & Spencer Group – Technical Analysis
According to Marks & Spencer Group’s financial statement indicates a market cap of £5.025 billion with total assets worth £9.072 billion. Revenue for 2020 was at £9.14 billion with a profit margin of -2.17% compared to £10.18 billion in 2019.
Oscillators for Marks & Spencer Group such as Relative Strength Index (14)(74.4), Stochastic %K (14, 3, 3)(91.8), Commodity Channel Index (20)(195.6), Average Directional Index (14)(26.3) and Awesome Oscillator(11.8) are neutral.
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Recent Developments
Marks & Spencer Group had been closing physical stores from before the pandemic. The company closed 17 stores in 2019. On January 2019, M&S announced that they would cut 7,000 jobs over the next three months (roughly 10% of the workforce of 78,000). This was largely due to done in areas such as support functions, in regional management and in its UK stores. The company reported its first loss in 94 years in November 2020, where it announced a pre-tax loss of £87.6m compared to profits of £158.8m in the same period of 2019. In May 2021, the company announced plans to close another 30 shops over the next 10 years as part of its turnaround plan. It also closed half of its French stores due to supply chain issues arising from Brexit.
According to earlier updates released by Marks & Spencer Group, the food sales over 5 months till August had risen 10.8%. Given the impact of Covid-19 restrictions, it is impressive how the company managed clothing sales which were just 3% below 2019/20 levels. Thanks to Chief executive Steve Rowe, the company delivered strong results in November. This included adjusted pre-tax profit for the six months to October, which is 53% higher than during the same period in 2019.
Marks & Spencer Group had 50.5% of its total clothing sales made online. Along with home products, this segment contributed £3.2 billion in 2021. This is a massive improvement considering the company was lagging behind its peers in its online sales just a few years ago. The move to online sales will help M&S reach new markets with lower initial costs. Last year, it launched 46 new websites around the world, including Argentina and Uzbekistan. While there are chances that some of these new ventures will fail, the majority wont, which would drive up profits.
Should You Buy MKS Shares?
As the shares have already had a strong run since September, trading 12 times 2021/22 forecast earnings, many investors are wondering whether there’s any room for the share price to rise further. There are certain risks. For instance, the company experienced quite a boost during the early days of the 2nd wave pandemic, which has been helped by online ordering through the group’s joint venture with Ocado. But there is fear that the grocery demand may not continue.
The company’s profits can be affected by rising wage costs and its clothing business. Important brokers covering the shares are cautious for the year ahead as consensus forecasts for the 2022/23 financial year show profits dipping this year. Considering this, now is not the time buy MKS shares.
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