Outlook: Marks & Spencer

THERE IS an old stock market saying that a struggling company's shares should be bought on the third profits warning. This is a variation of the "bad news comes in threes" adage. The corporate version has it that after three warnings the company's management finally realises that, yes, there really is a problem. With the true awfulness of the picture reflected in the price another old cliche should begin to come into play; if they don't do something about it, someone else will come along who will.

On this basis, we are due one more Exocet from Marks & Spencer before it is really time to buy. There have been two of the blighters in a year now, a 12-month period which has seen a quite breathtaking fall from grace for this former housewives' favourite. Already down from 664p to 315.5p in 18 months, WestLB Panmure yesterday put a new 280p price target on the stock. Don't expect it to get there in a hurry, though, because such is the scale and fanaticism of the M&S investment fan club that private investors and fund managers alike cannot resist piling in on every wobble, not withstanding the wait for the third profits warning rule.

Could there really be more bad news to come? If the City began to feel the dividend was under threat, then things might seriously slip. The dividend is barely covered by earnings as it is, and if trading does not improve soon, the doubts will grow. Such would be the outcry from M&S army of shareholders that we must assume this is still unthinkable in the M&S boardroom. As it is, the shares now yield almost 5 per cent and M&S has suffered the indignity of becoming a yield stock.

Big names can reinvent themselves. Just look at Dixons as evidence of that, and even fuddy-duddy old WH Smith is now regarded as a quasi-Internet stock. M&S has genuine recovery potential but more fresh blood needs to be brought in to make it happen. Analysts complain that M&S is a case of the same old people making the same old mistakes. Worse still, some of the best people are leaving, as always occurs when a ship begins to sink.

The board is trying desperately hard, and at least there is now a marketing director. But many recent "initiatives" look too little, too late. The decision finally to mirror changes in retail spending habits and go into mobile phones is an example. On this evidence, what odds on an M&S move into free Internet access provision? Stmichael.com anyone? Next year, maybe.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Recruitment Resourcer

£20000 - £21000 per annum + uncapped commission: SThree: As a graduate you are...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: A Customer Service Advisor is r...

Ashdown Group: Trainee Consultant - Surrey / South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Day In a Page

Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

Climate change key in Syrian conflict

And it will trigger more war in future
How I outwitted the Gestapo

How I outwitted the Gestapo

My life as a Jew in wartime Berlin
The nation's favourite animal revealed

The nation's favourite animal revealed

Women like cuddly creatures whilst men like creepy-crawlies
Is this the way to get young people to vote?

Getting young people to vote

From #VOTESELFISH to Bite the Ballot
Poldark star Heida Reed: 'I don't think a single bodice gets ripped'

Poldark star Heida Reed

'I don't think a single bodice gets ripped'
The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Families clubbing together to build their own affordable accommodation

Do It Yourself approach to securing a new house

Community land trusts marking a new trend for taking the initiative away from developers
Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

Money, corruption and drugs

The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

150 years after it was outlawed...

... America's first slavery museum is established in Louisiana
Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
Tony Oursler on exploring our uneasy relationship with technology with his new show

You won't believe your eyes

Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

Moores must go. He should never have been brought back to fail again

The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn