It is a big week for retail, with several top chains revealing their Christmas trading performance and shareholders in Scottish company Quiz Clothing voting on whether to quit the stock market.
The board of Glasgow-based Quiz announced before the festive break that it proposed cancelling its shares on the Alternative Investment Market as the cost of remaining outweighed the benefits.
Quiz has been through a turbulent few months and believes it has a better chance of survival as a private company. Just after Christmas it announced a £4.7m loss before tax for the half year to the end of September against £1.5m last year.
A general meeting has been called for Wednesday and if shareholders approve the proposal by at least 75% of the votes cast the cancellation will become effective on 23 January and all non-executive directors will resign.
Next
Next chief executive Lord Simon Wolfson raised guidance consistently during the year to January 2024 and he has repeated the trick in this fiscal year, observes Russ Mould of AJ Bell.
“That said, the shares are down by some 10% from the autumn’s all-time high as the quantum of the upgrades has shrunk, and analysts and shareholders will be looking for further positive momentum from this festive trading update,” he says.
He adds that the company may also use this trading statement as a chance to offer guidance for the new financial year, to January 2026.
In a note published before Christmas, Deutsche Bank said it expected a slowdown in fourth-quarter sales growth to 4.5% from the 7.6% reported in the third quarter.
According to October’s third-quarter trading update, online sales were once more outperforming those generated in the brick-and-mortar stores, while finance interest income remained a valuable contributor.
Mould adds: “Note that barely a quarter of the stores now reside in city centres, with almost two-thirds situated in retail parks and the rest in regional shopping centres.”
Analysts’ consensus points to a 2025-26 profit haul of £1.05 billion.
Marks & Spencer
Mould also notes ongoing momentum at Marks & Spencer, impressive first-half results and an upbeat analysts’ meeting in November, which outlined future plans for both cost efficiencies and investment in the underlying business proposition.
They all leave shares in Marks & Spencer at their highest level since spring 2016.
“That raises the bar of expectation,” says Mould, “although chief executive Stuart Machin has managed this deftly, so far, as per November’s theme of sustainable growth over the long term being the target and not just growth at any price.”
He says Mr Machin may seek to avoid any firm guidance on sales and profits, especially as there are still three months of the year to go, but current consensus is looking for:
* A 5% increase in total group sales to £13.7 billion
* Stated pre-tax income of £776 million, against £673 million a year ago
* Adjusted pre-tax income of £830 million, against £716 million a year ago
Strategically, the company may offer guidance on the ongoing integration of online logistics specialist Gist, the £500 million cost efficiencies target and the ongoing drive to add one percentage point of market share in both Food and Clothing & Home.
All of these are designed to feed into the long-term goals of a 4%-plus operating margin in Food and a 10%-plus return on sales from Clothing & Home.
Mould says any talk of dividends will likely have to wait until the full-year results, which usually come out in May.
Analysts expect a total dividend for the year to March 2025 of 4.8p, up from 3p in the prior year, despite the unchanged interim payment of 1p a share. M&S has not run a buyback scheme of any magnitude since 2015 and before that in 2007.
