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Retail was Europe’s top-performing sector last year, but already there are signs that gains this year will be much harder fought. Marks & Spencer (M&S) Group Plc, whose shares more than doubled in 2023, slid about 6% as strong growth in holiday sales proved an insufficient catalyst for those banking on further upgrades to guidance.
The retailer noted economic uncertainty ahead, while saying results for the year ending in March will be consistent with broker forecasts.
“Given high expectations, this may not be enough to push the shares on from here,” Deutsche Bank AG analyst Adam Cochrane wrote in a note, while noting that the stock remains a top pick in the sector on a price-earnings multiple of 11 times.
It was a similar story for Tesco Plc, whose shares eased 0.2% in a muted response to the grocer’s upgraded profit outlook. Shares of peer J Sainsbury Plc slid more than 6% after the retailer failed to increase its guidance. “The share price weakness appears to be reflective of modest profit taking after recent strong gains from all three retailers,” Michael Hewson, chief market analyst at CMC Markets UK, said in emailed comments.