Outlook: Only the brave would don St Michael's halo

IS IT FINALLY time to buy Marks & Spencer? Hope springs eternal when it comes to the fabled St Michael, and Britain's new model army of private investors reckons it is. M&S is still such a powerful brand, the thinking goes, and its shares have so plainly been oversold, that eventually it must recover. Either that, or someone will bid for it.

It scarcely needs repeating that this was being said a year ago, six months ago, even three months ago, and every time the price has gone lower still. Indeed, it has been said all the way from the peak two years ago, when the shares were still trading at more than 650p.

But, with the price up more than 20 per cent over the last two days, on gigantic volume, there is now plainly a real head of steam behind the belief that the company has finally hit bottom. Not even M&S's bland assertion yesterday that it knew of no reason for the sudden share price movement dented optimism much; the shares largely hung on to their gains.

Now, it is often the case that the target company is the last to know of the predator waiting in the bushes, ready to strike, and it is this, rather than renewed confidence in trading prospects, that has really captured the market's imagination.

As our news story opposite reports, there are three obvious candidates - Kingfisher, jilted at the altar by Asda in favour of Wal-Mart; Asda's former boss, Archie Norman; and Tesco. To this slate ought to be added a fourth possibility - a financial purchaser - such is the perceived scope for gearing up M&S's balance sheet.

In these markets anything is possible, and a hostile bid certainly should not be discounted altogether. But there are any number of reasons for thinking that this is yet another false dawn for M&S shares. Take the market favourites to bid. Kingfisher would certainly love to do it, but has it got the management? It was partly to address this problem that it bid for Asda, only to be outgunned by Wal-Mart, and it is not at all clear what it would bring to the party at M&S.

Tesco already has its work cut out defending its own brand, not to mention its overseas expansion programme. Reviving M&S might be the management challenge too far - besides which, it would undoubtedly face a competition problem given M&S's 3 per cent share of the national groceries market.

As for Archie and Knutsford, well maybe, but still it seems a trifle implausible. M&S and its shareholders are desperate, and if Mr Norman wanted the job they would be only too happy to give him it. But how much value would they be prepared to cede to him? Knutsford is valued by the stock market at pounds 655m, and outstanding businessmen though Mr Norman is, most shareholders would baulk at that.

A cash bid from a financial buyer might be a different matter. Unfortunately, things don't seem to be getting any better at M&S. Trading remains dire. In these circumstances, a cash bid becomes extremely high risk. The company seems to have great asset backing, but how much are these stores really worth if e-commerce is going to drain them of their custom?

Not wishing to be a wet blanket, but whoever takes on M&S still has a mountain to climb in turning round its fortunes. All the same, you never know. Optimism is the name of the game these days, and someone may be brave enough.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
News
ebooksNow available in paperback
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

Ashdown Group: Marketing Services Manager - (communications, testing, DM)

£32000 - £35000 per annum + benefits: Ashdown Group: Marketing Services Manage...

Guru Careers: Finance Account Manager

£Neg. (DOE) + Excellent Benefits: Guru Careers: A Finance Account Manager with...

Ashdown Group: Java Developer - Hertfordshire - £47,000 + bonus + benefits

£40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...

Ashdown Group: Direct Marketing Manager - B2C, Financial Services - Slough

£45000 - £55000 per annum + Benefits: Ashdown Group: An exciting opportunity h...

Day In a Page

Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas
La Famille Bélier is being touted as this year's Amelie - so why are many in the deaf community outraged by it?

Deaf community outraged by La Famille Bélier

The new film tells the story of a deaf-mute farming family and is being touted as this year's Amelie
10 best high-end laptops

10 best high-end laptops

From lightweight and zippy devices to gaming beasts, we test the latest in top-spec portable computers
Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

The batsman has grown disillusioned after England’s Ashes debacle and allegations linking him to the Pietersen affair
Susie Wolff: A driving force in battle for equality behind the wheel

Susie Wolff: A driving force in battle for equality behind the wheel

The Williams driver has had plenty of doubters, but hopes she will be judged by her ability in the cockpit
Adam Gemili interview: 'No abs Adam' plans to muscle in on Usain Bolt's turf

'No abs Adam' plans to muscle in on Usain Bolt's turf

After a year touched by tragedy, Adam Gemili wants to become the sixth Briton to run a sub-10sec 100m
Calls for a military mental health 'quality mark'

Homeless Veterans campaign

Expert calls for military mental health 'quality mark'
Racton Man: Analysis shows famous skeleton was a 6ft Bronze Age superman

Meet Racton Man

Analysis shows famous skeleton was a 6ft Bronze Age superman
Garden Bridge: St Paul’s adds to £175m project’s troubled waters

Garden Bridge

St Paul’s adds to £175m project’s troubled waters
Stuff your own Christmas mouse ornament: An evening class in taxidermy with a festive feel

Stuff your own Christmas mouse ornament

An evening class in taxidermy with a festive feel
Joint Enterprise: The legal doctrine which critics say has caused hundreds of miscarriages of justice

Joint Enterprise

The legal doctrine which critics say has caused hundreds of miscarriages of justice
Freud and Eros: Love, Lust and Longing at the Freud Museum: Objects of Desire

Freud and Eros

Love, Lust and Longing at the Freud Museum