"Today’s weak uplift in sales will fail to convince investors that the foundations for a rebound are in place," comments Paul Mumford, senior fund manager at Cavendish Asset Management.
The company’s overall UK sales grew only 0.8 per cent in the three months to Boxing Day. Mumford says the figures serve only to underline the problematic market position of Marks & Spencer in recessionary Britain: "The chain’s food division is only now starting to address the competition of supermarkets. Its premium brand does not play well in Britain’s new age of austerity."
"Even if M&S had met analysts’ initial hopes of 1.2 per cent growth, investors would have had good cause to stay their hand," he adds. "Not only were comparatives incredibly weak, but December’s singular cold snap is ideal for the functional, comfort and quality knits of M&S over more fashion-focused high-street rivals. Put simply, we are not yet seeing a long-term growth story re-emerge. Today’s figures are too anaemic to get the market to swing behind an M&S revival or support the equity raising that some have touted as necessary to fund future growth."
Could the British brand once again fall prey to a takeover bid, following Philip Green’s attempt to take the company private in 2004?
"The market’s infatuation can only last so long without a stronger foundation, which will otherwise see M&S on a long-term languishing spiral," says Mumford. "Should the share price continue to track down from 400p, a revival in global markets could yet see it become victim to a renewed takeover battle down the line. The Cadbury takeover drama is warning enough of our transatlantic cousins’ ambitions to appropriate our stock market jewels, given half the chance. All in all, Marc Bolland [M&S’s impending chief executive] could find the honeymoon rather grittier than last quarter’s share price recovery may have first suggested."
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