MARKET REPORT: Marks & Spencer slumps to become session's biggest loser in the FTSE 100 as City loses faith

Marks & Spencer was at the bottom of blue-chip investors' shopping lists yesterday after a heavyweight City broker gave it the thumbs-down.

The troubled retailer was the session's biggest loser in the FTSE 100 Index, down 8.6p, or 2.1 per cent, at 398.1p, after Bank of America Merrill Lynch downgraded it to 'under perform' from 'neutral'.

M&S chief executive Marc Bolland revealed in January he was stepping down after failing to revive the flagging fortunes of the chain's clothing arm. 

Marks & Spencer was the session's biggest loser in the FTSE 100 Index, down 8.6p, or 2.1 per cent, at 398.1p, after Bank of America Merrill Lynch downgraded it to 'under perform' from 'neutral'

Marks & Spencer was the session's biggest loser in the FTSE 100 Index, down 8.6p, or 2.1 per cent, at 398.1p, after Bank of America Merrill Lynch downgraded it to 'under perform' from 'neutral'

Bolland announced his plan to retire in April after M&S said general merchandise (GM) like-for-like sales had slumped 5.8 per cent in the three months to Christmas, although food sales rose.

M&S said the group's head of GM, Steve Rowe, would take over on April 2 from Bolland, who is paid £975,000 a year and bagged a £15million 'golden hello' when he joined six years ago. 

Bank of America Merrill Lynch, which also cut its price target on M&S to 385p from 480p, unveiled the moves in a note entitled Apparel Recovery Remains Elusive.

The US investment bank noted the continued decline in like-for-like growth in M&S's GM arm, which includes its fashion business. 

It urged the company to improve aspects of its supply chain such as design and availability and to review pricing of key ranges. 

It forecast subdued trading continued in the fourth quarter, particularly in GM where it expected like-for-like sales to have fallen 2.8 per cent. 

It downgraded its full-year 2017 and 2018 earnings per share estimates by 5 per cent, putting it 7 per cent below market consensus.

'While the dividend yield of about 4.5 per cent provides some support, we see limited scope for growth,' it said.

Meanwhile, shares in troubled microchip designer Imagination Technologies ticked up 2.75p, or nearly 1.7 per cent, to 165.75p after broker N+1 Singer said the company could be a bid target. 

Retiring: Bolland announced his plan to retire in April after M&S said general merchandise (GM) like-for-like sales had slumped 5.8 per cent in the three months to Christmas, although food sales rose

Retiring: Bolland announced his plan to retire in April after M&S said general merchandise (GM) like-for-like sales had slumped 5.8 per cent in the three months to Christmas, although food sales rose

Last month, the company's chief executive Hossein Yassaie quit as Imagination forecast a pre-tax loss for the year to the end of April. 

The group warned on profits in December amid slowing demand in China for its graphics processors, which are used in Apple's iPhones and other smartphones.

It also confirmed in February that it was selling Pure, following its revelation in January that it was considering its options for the digital radio maker.

There has been speculation that Imagination could be a takeover target for, among others, Apple, which is its fourth biggest shareholder with an 8.38 per cent stake. 

Imagination's graphics chips are thought likely to be the chief attraction for Apple, although analysts believe it may also have an eye on technology that the company is developing for self-driving cars.

N+1 Singer upgraded Imagination to 'buy' from 'hold' and increased its price target on the stock to 191p from 151p. The broker's analyst Oliver Knott said Imagination was likely to continue to face tough trading.

But he added: 'Given the strength of the group's unique intellectual property, we believe any material share price weakness could bring potential bidders for the company out of the woodwork.

'We believe Imagination is a highly attractive asset and would expect a bid to be in excess of our new target price.'

The Footsie ended Friday 103.09 points ahead at 6139.79 as banks rose in response to the economic stimulus measures unveiled on Thursday by the European Central Bank.

Rising: The likes of Spain's Banco Santander, Germany's Deutsche Bank and France's BNP Paribas rose more than 5 per cent

Rising: The likes of Spain's Banco Santander, Germany's Deutsche Bank and France's BNP Paribas rose more than 5 per cent

Continental European banking stocks were the main beneficiaries of the plan for ultra-cheap four-year loans to banks. 

The likes of Spain's Banco Santander, Germany's Deutsche Bank and France's BNP Paribas rose more than 5 per cent. 

But British banking stocks were also up, with Barclays advancing 6.1p, or 3.8 per cent, to 166p, Standard Chartered gaining 19.3p, or 4.3 per cent, to 467.8p and RBS brightening 7.9p, or 3.6 per cent, to 229.6p.

Oil stocks were up after the International Energy Agency (IEA) said the oil price may finally have bottomed out after an unprecedented drop in the past 18 months.

Recent sharp gains in the price of a barrel of Brent crude, which had risen to just over $40 last night from $28.5 in mid-January, did not necessarily mean the worst was over, the IEA said. But it added: 'Even so, there are signs prices may have bottomed out.'

Shares in BP spurted 5.2p, or 1.5 per cent, to 348.4p and Royal Dutch Shell's stock was 2.16 per cent or 35.5p slicker at 1676.5p.

Elsewhere, Minoan soared 2.88p, or 28.4 per cent, to 13p on news that Greek president Prokopios Pavlopoulos had signed a land use decree for the travel group's luxury resort project in Greece.

Tlou Energy powered up nearly 7 per cent or 0.25p to 3.88p as the coal bed methane project developer said it aimed to book independently certified reserves at its Lesedi project in Botswana later this year.

 

Analysts at Deutsche Bank have lost their appetite for shares in the owner of restaurants Frankie & Benny's and Chiquito. 

On Wednesday The Restaurant Group (down 9.6p to 398p) blamed weaker consumer confidence for a 1.5 per cent dip in sales after ten weeks of trading in 2016. 

Downgrading the stock to 'hold' from 'buy', Deutsche Bank said competition from rivals meant TRG was unlikely to increase sales for about two years.

 

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