The FTSE 100 (FTSEINDICES: ^FTSE) climbed 405 points (6.5%) in July, to 6,621, so anyone with a good spread of investments would have done well. But are there any sectors that enjoyed notable success? Well, retail can be a good indicator of economic well-being, with people often starting to spend more (and invest more in retail shares) when they’re feeling optimistic.
And our retailers did indeed have a decent month. Here are three from the top flight whose shareholders were rewarded well last month:
Marks & Spencer
Marks & Spencer (LSE: MKS) shares climbed 54.5p (12.6%) to end July on 485p, taking them up around 45% over the past 12 months as investors become more convinced by the department store chain’s turnaround plans. A first-quarter update told of a rise in group sales of 3.3% and, as a sweetener, we heard that General Merchandise (ie non-food) sales actually rose, albeit by only 0.5%.
UK sales were up 2.7%Â with like-for-like up 0.3%. International sales gained 8.7%, and internet sales via MKS.com soared by 29.9%. Chief executive Marc Bolland told us that “We continue to make good progress with our plans to transform M&S into an international, multi-channel retailer“, though the company did say it remains cautious about rest of the year and will “continue to manage the business tightly“. We should have first-half results on 5 November.
After the past year’s price rise, M&S shares are finally back up to a forward price-to-earnings (P/E) ratio of 14.5 based on full-year forecasts, after having been depressed for years. There’s also a 4% rise in the dividend expected, which would be its first lift in three years and would provide a yield of 3.8%.
Tesco
Tesco (LSE: TSCO) (NASDAQOTH: TSCDY.US) shares have had a pretty rocky year. The UK’s biggest supermarket looked like it was returning to former glories as 2013 got off to a good start, but the price slumped again by June to wipe out most of the year’s gains. Since then the shares are on the way back up, thanks to a 36p (10.8%) rise in July to end the month at 367p.
There has been no real news since June’s first-quarter update which told of a 2.7% growth in sales excluding petrol, and we have until 2 October to wait before we get first-half results. The year is still forecast to be flat for earnings, although there’s a small rise in the dividend expected — it should be around twice-covered and should yield about 4.2%. That would put the shares on a P/E of just over 11, a bit below the sector average — second-biggest J Sainsbury is on a forward P/E of 12.4, but with better growth forecast.
Will Tesco get back to its old winning ways? As I have it in the Fool’s Beginners’ Portfolio, I think so, and there is a return to reasonable earnings growth forecast for 2015.
Kingfisher
Our third for today is Kingfisher (LSE: KGF), the owner of the UK’s B&Q and Screwfix brands, and a number of European outlets including Castorama. Spending on DIY and home improvement took a bit of a hit during the downturn, but the Kingfisher shares held up pretty well. They were pretty flat over the 12 months to April, but since then they’ve been rocket-propelled — up 110p (38%) between 1 April and 31 July, putting on 54.5p (16%) last month to finish on 397.5p.
A final decision in Kingfisher’s favour in a French tax case dating back to 2003 helped, and the firm will recognise an exceptional credit of about £145m in this years results. And a positive Q2 pre-close update added extra impetus, with total sales for the quarter up 5.2% and like-for-like up 2.5%. The better weather helped, and chief executive Ian Cheshire said that “We are on track to deliver a first half in line with our expectations“.
Full-year forecasts suggest a 6% rise in earnings per share, but after the recent price rise that does put the shares on a P/E of 17, which some might think a bit high for this kind of business — but earnings are predicted to keep rising.
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> Alan does not own any shares mentioned in this article.