Retail colossus Marks & Spencer(LSE: MKS) may have furnished the market with forecast-beating sales figures in Thursday trading. But I for one remain less-than-convinced by the company's latest set of numbers.
It announced that like-for-like sales of its clothing and homeware items rose 2.3% during the 13 weeks to December 31, snapping back from the 5.9% decline endured during April-September.
Lauding the company's performance over the crucial Christmas period, chief executive Steve Rowe commented that "better ranges, better availability and better prices helped to improve our performance in a difficult marketplace."
For the large part however, the market has paid little attention to the latest update. Scratch a little deeper and it's easy to see why. The comparisons with the weak year-ago period were relatively easy. And changes to the reporting period meant an additional five trading days were included. This is likely to have an impact on the company's fourth-quarter results.
On top of this, Rowe made reference to the "uncertain consumer outlook" still facing M&S. Shopper spending power is widely expected to weaken in the months ahead. And of course the retailer has to overcome the competitive pressures swirling around the high street.
The City certainly expects bottom line pressure to persist at Marks & Spencer for some time yet, and earnings dips of 17% and 1% are pencilled-in for the years to March 2017 and 2018 respectively.
While these figures result in P/E ratios of just 12 times for this year and next, I believe the risks continue to outweigh any potential rewards at Marks & Spencer, even at current prices.
But Marks & Spencer wasn't the only London-listed fashion giant to announce a festive sales bump on Thursday.
Indeed, Superdry owner Supergroup(LSE: SGP) announced that sales of its casualwear products sprinted 20.6% higher during the 10 weeks to January 7. And on a like-for-like basis, shopper transactions rose 14.9%, a result the retailer put down to "the positive impact of the group's store expansion programme [that] includes the benefit from the weakness in sterling."
Supergroup's exceptional update sent shares in the business striding to fresh record peaks above £17.80. And I believe the stock has much further to run as its exciting growth strategy clicks through the gears.
The company announced it had opened a further nine outlets during the Christmas period alone as part of its global expansion programme. And it also has big plans for its online operations in Europe, North America and China -- this comes as little surprise as internet revenues grew 40% during May-October.
These factors are expected to send earnings 16% higher in the year to April 2017, according to City forecasts, and a further 12% rise is predicted for fiscal 2018.
Consequent P/E ratios of 20.3 times and 18.7 times may sail above the watermark of 15 times that's widely considered attractive value, but Supergroup's near-term multiples are brilliant value in my opinion when you consider the firm's stunning top-line momentum.
Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended Supergroup. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.