On Thursday, the London stock market displayed a positive trend, with the FTSE 100 closing the day 0.78% higher. This rally occurred despite the challenges faced by British retail companies, which saw a noticeable decline even with reported sales growth during the festive Christmas season. Marks and Spencer Group recorded an impressive 5.6% increase in sales for the 13-week period ending on December 28, 2024, totaling £4.06 billion.
However, the retailer faced significant losses among blue-chip stocks, dropping 8.17%, primarily due to warnings about rising costs from higher taxes. Compounding these issues are uncertainties regarding the outlook for economic growth, inflation, and interest rates. Deutsche Numis Research noted, "Whilst there is no explicit guidance comment, we see FY PBT consensus being held at [£839 million]...
although with a small upside risk skew given the sales beat." They also highlighted the absence of an outlook statement for FY26e at this stage, confirming that the company is satisfied with the consensus established in the previous year. Analysts expect "progress" in the remaining months of the year, predicting year-on-year growth for the fourth quarter, aligning with previous expectations. In contrast, Tesco maintained its retail adjusted operating profit guidance for fiscal 2025 at £2.9 billion, following a 3.1% rise in like-for-like sales for the 19-week period ending January 4.
At market close, Tesco's shares fell by 0.46%. RBC Capital Markets commented, "We view Tesco as a best-in-class player in the UK Food Retail space, with a strong business model and an experienced management team." They further indicated that the company is expected to maintain good cash generation, supported by a robust balance sheet, which should enable Tesco to continue its trend of returning additional cash to shareholders. Looking ahead, Friday's economic news is expected to be relatively quiet.
However, next week will usher in a series of significant data releases from the UK, including key figures on inflation, gross domestic product, industrial production, and retail sales..