James Moore: M&S blames the rain, and it really is a washout
Investment View: Having spent 10 minutes trying to find a checkout I waited an age in an unhappy queue
Marks & Spencer
Our view Sell
Price 312.2p (-6p)
M&S is looking about as cheerful as the British summer right now – and it was the rain that took the blame for yet another set of disappointing numbers earlier this week.
Well, the rain that is and Kate Bostock, who as the head of general merchandise – read clothing and including the key womenswear business – will be ensconced with her headhunter looking for new opportunities right now.
The weather might be the excuse du jour (and this is not the first time that one's been trotted out) but of wider concern is the fact that customers took one look at the summer range and went bleurrgh. Flappy-fronted cardigans, garish colours, Ms Bostock might have done well at Next and George Davies but it looks like she's got it horribly wrong with the designs this time.
But let's be honest here: it isn't only the fashions that are wrong. The shops (as chief executive Marc Bolland recognises but hasn't fixed yet) don't always provide the friendly, efficient, service for which M&S was once renowned. I visited one recently and, having spent a good 10 minutes trying to find a checkout so I could pay, then had to wait an age in a long and unhappy queue. That's not a pleasant experience when your legs don't work properly and you are reliant on crutches, believe me.
So a bad range, dowdy stores and less-than-efficient service. It's a terrible combination when the consumer is being squeezed.
No wonder the company reported a 6.8 per cent fall in general merchandise sales for the 13 weeks to the end of June at stores open at least a year in the UK.
The problem facing M&S is that it might not get better very quickly. If customers can't get what they want (and aren't served well) they'll be gone to rivals and might not return for a long time.
M&S seems to go in cycles, and right now it is firmly on the downward slope. So what's Mr Bolland's prescription for getting it moving in the right direction?
Well Ms Bostock has been replaced by, erm, a middle-aged man calledJohn Dixon. He used to be in charge of, erm, food. It's true that the food business has been a star. But the clothes, with a range that puts people off and a stodgy supply chain that doesn't allow M&S to react when the weatherman is uncooperative, is a different matter.
And one always has to wonder when businesses put blokes in charge of womenswear. Middle-aged businessmen who spend their lives in suits aren't always terribly good at it. And so enter Belinda Earl.
The former Debenhams chief executive had a great deal of success with Designers at Debenhams, persuading the likes of John Rocha and Jasper Conran to work with a shop that one wouldn't have expected them to be involved with in a month of Mondays.
Most recently with Jaeger, her hiring as style chief looks to be smart move. But she doesn't arrive until September and it will take some time for her influence to be felt, during which time M&S could lose even more customers.
Is it worth pointing out here that the man in charge of the whole shebang, Mr Bolland, was very good at food when he was at Morrison's?
Food's doing well at M&S but (so far) it doesn't look like he's done a sterling job with anything else and there won't be any Ms Bostock to jettison around next time if the numbers are still bad.
Shares in M&S have basically flatlined since this column last took an in-depth look at the end of January when they stood at 323p.
They trade on nearly 10 times forecast full-year's earnings for the year ending 31 March, while offering a prospective yield of 5.5 per cent. The yield is two times covered by earnings and it is basically the only reason to hold the stock.
Even if Ms Earl can work some magic on the ranges – and M&S's was trashed by The Daily Mail which given its readership spells trouble – there won't be any quick improvement. Analysts are cutting their forecasts with good reason.
I recommended that investors avoid the shares in January. That view hasn't changed.
Even with a nice yield, if you have these shares right now sell them.
- 1 Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
Sony hack: Angelina Jolie branded 'seriously out of her mind' in further embarrassing leaked email saga
Panic Saturday: 13 million Britons spend £1.2bn – while 13 million others across the country live in poverty unable to afford food
iJobs Money & Business
$200 - $350 per annum: Carlton Senior Appointments: Managing Producer Office...
$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...
Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...
Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...