M&S upgraded after Q2 sales update.

(From FT Investor (Stories))

LONDON (FT.com) - Marks and Spencer's better-than-expected second quarter sales figures were greeted with a round of ratings and earnings upgrades from analysts, though some caution remains that buoyant high-street spending cannot continue in 2003.

JP Morgan raised its earnings per share and pre-tax profits forecasts for Marks & Spencer by almost 6 per cent to take account for the stronger than expected trading.

The high street fashion and food retailer reported second quarter sales far exceeding JP Morgan's and consensus forecasts, the investment banker said. See more on the M&S trading update

JP Morgan increased its like-for-like assumptions for the full year to 8 per cent at clothing, which implies like-for-like growth of 3.5 per cent in the second half against tougher comps. Growth was 13 per cent in the first half, JP said.

The 4 per cent like-for-like growth estimate for the full-year, which is in-line with the first half, is held.

Despite the strong growth in sales, this was achieved with a higher level of markdowns than expected, the US broker said, but this highlights the strength in momentum at M&S, not just in clothing but also in food and home. Despite a slower September, JP added, it also highlights the disparity between trading at M&S and Next which JP Morgan rates as "underweight".