The retail business bore the brunt of the crisis-led spending slowdown, but some of our best-known high street names have put in a very strong November ahead of the Christmas rush.
Marks & Spencer
Marks & Spencer (LSE: MKS) shares have put on 27% since 13 October to reach 489p, and in 2014 so far they’re up 14% against a FTSE 100 that has been flat.
The big boost came from a first-half update on 5 November showing a 1% rise in total sales to £4.9bn with underlying pre-tax profit up 2.3% to £268m. Chief executive Marc Bolland told us that “M&S delivered sales growth and increased profit in the first half despite a tough market, particularly in September“, suggesting things are getting better as the year progresses.
M&S upped its full-year gross margin guidance from +100bps to between +150 and +200bps, and now expects a change in operating costs of +3.5% from an earlier +4%.
WH Smith
WH Smith (LSE: SMWH) benefited from its niche travel locations to produce a 9% rise in pre-tax profit to £112m and a 15% rise in EPS to 79p for the year ended August 2014.
That was reported on 16 October, and launched a bull run that has taken the shares up 27% so far to reach 1,261p. There’s been a 25% overall gain so far in 2014 after a lacklustre prior ride.
We’ve now seen five straight years of EPS rises, and there’s another 8% forecast for 2015, putting the shares on a forward P/E of 15 with a predicted 3.1% dividend yield. Those are around the FTSE average, which looks good for a strong company.
Debenhams
Debenhams (LSE: DEB) shares have had the weakest year of the three, dropping 23% to a low point in early October. But since then we’ve seen a 25% surge to 71.6p to pull the performance in 2014 to a modest 4% drop.
Debenhams recorded a fall of 20% in underlying pre-tax profit for the year ended 30 August, but that was in line with expectations. And we saw total sales up 1% with gross transaction value up 1.7%, suggesting we could be heading for better times. Net debt improved and the full-year dividend was maintained at a yield of 5.1%, with chief executive Michael Sharp pointing to “the challenges we faced in the first half” having been countered by a better second half.
With the shares on a forward P/E of only 9.5 and the dividend forecast to be lifted a little in 2015 as earnings recover, Debenhams could be one to watch.