Marks & Spencer third quarter update: What the analysts say

All of this raises a question mark over how successful the new general merchandise strategy is. At a broad level we still maintain that, on clothing, the pace of change needs to go further and faster. Moreover, we believe that greater focus and clarity is required in delivering for the target market. Over the next ten years the most significant opportunity in clothing comes from the older, younger at heart generation of over 50s. It is far from clear that M&S is fully addressing the needs of this important constituency. Despite all of this M&S has bought itself some time, if only because the numbers over the shorter eight week Christmas trading period look more rosy with both total and like-for-like general merchandise sales growth in positive territory. That said, given the weakness of last year’s quarter the comparatives are bound to be fairly soft. Nevertheless, this is now the benchmark that M&S must at least maintain and preferably beat over the next quarter if it is to be seen as making progress. In a nutshell, however M&S is still telling the same old story: a great food business with a general merchandise business that simply must try harder- Neil Saunders, Conlumino

1.We continue to believe it will take a number of seasons before the existing team is able to manifest a marked improvement in performance in womenswear. 2. The initiatives relating to the supply chain and IT address under-investment of the past and bring the infrastructure up to the standards of international peers but will not, we believe, lead to a significant increase in profits over the medium term. 3. Debt levels remain over £2bn restricting the potential for an accelerated dividend payout and there remain accounting issues relative to peers – Freddie George, Cantor Fitzgerald

Some old Christmas story - Industry outperformance from food and an unsparkling one for general merchandise, with weather and heightened promotional environment contributing to the spoilt party. This results in a 5% cut to FY14E profit before tax. However, we believe progress has been made on womenswear. A lot of bad news in share price. The market has already anticipated downgrades we believe, and with FY14 being the last year of elevated infrastructure capex, M&S should start to generate cash. Management should be able to start unlocking ever increasing efficiencies as it approaches the end of its infrastructure upgrade programme. Also we believe there has been some progress on womenswear ranging and instore presentation with more to come – Kate Calvert, Investec

Food was only up by 1.6% like-for-like in the Christmas quarter, which is a bit below expectations of +2%/3%, but gross margins were notably firm. And general merchandise was down by 2.1% like-for-like in the period, much as expected, because of a terrible October (which wasn’t mentioned at the interims in November…), with weak gross margins – Nick Bubb, independent analyst