MARKS & SPENCER (MKS) Very Top Heavy - Short from £4.01p Oct 2005

Fitch takes a negative view of M&S bull run
By Sarah Butler



FITCH, the debt ratings agency, poured cold water on the bull run in Marks & Spencer shares yesterday, saying that its view of the outlook for the retailer remained negative.



“While some signs of recovery are evident, they are against soft comparables, with sustainable material improvement still not evident for M&S,” Jonathan Pitkanen, a senior director in Fitch’s corporate group, said in a statement. Fitch restated its BBB+ rating on M&S’s senior unsecured debt.

M&S’s shares have risen 46 per cent to 505p during the past three and a half months, topping 500p for the first time in more than seven years on hopes that the retailer has experienced a stronger than expected Christmas.

Busy stores and a lack of the one-day discounts that characterised M&S’s run-up to Christmas last year have given hope that it will have been able to lift sales and margins.

But Fitch points out that underlying sales of general merchandise declined 6.1 per cent in the six months to October 1, the last time M&S reported.

While the trend improved dramatically in the second quarter during a generally tough time for clothing retailers, Fitch points out that the improvement was set against soft comparable sales data.