Marks and Spencer sits at a difficult place in the market between clothes retailer and food retailer. The food halls have remained open during the coronavirus shutdown, some compensation for the closed clothes stores.
However, with a very limited online offering through Deliveroo, Marks and Spencer has most likely missed out on a significant portion of the rush to stockpile and soaring online demand. The tie up with Ocado is not due to begin until September. Investors will be hoping that his can be brought forward given the current climate. However, on a plus side the big shift to online food shopping will work in favour of M&S and its Ocado tie up going forwards. The food business is likely to take a hit from a reduction in travel and the closure of its
The clothes business has been struggling for years and covid-19 shut will mean trading has been severely constrained over the past 8 weeks. The cancellation of £100 million worth of Spring/Summer wear will almost certainly be appreciated preventing still higher levels of unsold stock. Even as store eventually reopen, social distancing measure will be a complication for the retail sector, limiting customers, not to mention the deep recession which could see spending on non-essential items tumble. With this in mind, the outlook is poor for the remainder of the year.
Profits are expected to come in well below £420 million forecast just a few weeks ago.
Levels to watch:
M&S trades below its 50 & 20 sma on the 4 hour chart on a bearish chart. Immediate support can be seen at 85.4p, prior to 74p low struck in March.
On the upside, resistance can be seen at 88p (20 sma) prior to 91p (50 sma) and 103p (high 12th May).