Marks And Spencer Share Discussion Threads

[darrin1471] 25/5/2023 10:23

Ocado retail attracts a lot of negatives, probably due to its loses, historical high share price and the secretive terms of its international contracts.
The shortcomings of its business model is that huge investment is required upfront and profits are difficult before scale. Once you have scale, the cost savings and barriers to entry look significant.
Due to the location and size of the MKS food halls, a whole shop Ocado solution is needed if they want to expand the MKS offer beyond being a niche player.

[philanderer] 25/5/2023 10:05

Goldman Sachs raises Marks & Spencer price target to 220 (180) pence - 'neutral'

Deutsche Bank raises Marks & Spencer target to 235 (210) pence - 'buy'

SocGen raises Marks & Spencer price target to 190 (140) pence - 'hold'

[debsdowner] 25/5/2023 09:28

How MARKS plans to protect it's magic:

[debsdowner] 25/5/2023 09:24

darrin,

"But M&S shares have still underperformed those of almost all other major UK retailers, even ignoring dividends, since the Ocado Retail deal was announced in February 2019."

MARKS not underperformed BooHoo or ASOS ?

[darrin1471] 25/5/2023 09:17

FT not a fan of the M&S stake in Ocado:



At Marks and Spencer executive bonuses returned last year. Store staff have had several pay rises. Prices for customers have been held down, as far as possible, and the retailer’s latest profits beat expectations. But shareholders are having to wait until early 2024 for their first dividend since before the pandemic.

The group, whose protracted turnround efforts have spanned seven UK prime ministers but finally appear to be having a lasting effect, axed payouts at the start of the pandemic to protect its balance sheet.

It will be among the last among major retailers to restart them — Next did so at the start of 2022 (and has been buying back shares too) while Primark owner Associated British Foods resumed dividends in late 2021. Supermarkets, which boomed during the Covid-19 crisis as restaurants and pubs were locked down, never fully stopped dividends.

Stuart Machin, the M&S boss, says the caution in resuming the payouts reflects lingering uncertainty over consumer demand and cost pressures. Some costs in the food supply chain have eased, but energy and wage bills are still elevated — and what effort it has made to keep prices down for consumers has eroded margins. The company also has a £200mn bond to repay at the end of the year.

But there is another factor at play. By the time M&S decides on the quantum of its interim payout, it will know whether it needs to find £156mn to pay Ocado the remaining consideration for its 50 per cent stake in Ocado Retail, the online supermarket jointly owned by the two companies.

The payment is contingent on Ocado Retail’s performance against an undisclosed target in the year to November 2023, and M&S has already reduced the estimated fair value of the liability on its balance sheet.

It is an irony that won’t be lost on the company’s army of small shareholders — individuals account for almost 98 per cent of investors by number — who dutifully stumped up four years ago in the £600mn rights issue that financed the bulk of the Ocado Retail transaction.

That deal, trumpeted at the time as providing a “profitable, scalable presence in the online grocery market”, also involved M&S taking over from Waitrose as a supplier of groceries to Ocado.

But it was expensive; the £562mn upfront consideration alone valued Ocado Retail at £1.12bn. For comparison, the Walker family acquired full control of Iceland, which has a similar UK market share of around 2 per cent and comparable annual sales, at an implied valuation of less than £200mn just a year later. As well as the rights issue, M&S cut its dividend by 40 per cent to help foot the bill.

During the pandemic Ocado Retail was profitable but not scalable — it could not expand capacity quickly enough to take full advantage of soaring demand.

More recently, as the pandemic’s online shopping bubble has deflated, Ocado has found itself with excess capacity and losses. Its contribution to M&S’s latest results was a hit of £29.5mn; analysts at Barclays expect losses to continue for the next two years.

The venture also requires funding and has drawn down £30mn from M&S as part of a shareholder loan facility, with further outflows of “up to £70mn” possible in the current year.

Machin has flagged initiatives to improve Ocado Retail’s performance, including adding more M&S lines to its ranges and increasing collaboration in areas like logistics and marketing. But Ocado Retail has its own board and Ocado the casting vote over its chief executive, so fixing the venture is not entirely within his gift.

That all changes next summer, when under the terms of the JV agreement M&S can opt to consolidate Ocado Retail’s results into its own.

This may be why Machin says he remains “very confident” that it will all be worth it in the end. And for the time being, enough is going right at M&S — its shares popped 11 per cent on Wednesday after its forecast-beating results — to earn some goodwill from the market.

But M&S shares have still underperformed those of almost all other major UK retailers, even ignoring dividends, since the Ocado Retail deal was announced in February 2019.

As they wait for payouts to restart, shareholders may feel entitled to ask whether M&S could have achieved the £600mn of sales it made to Ocado Retail last year through a simple supply arrangement rather than an increasingly costly joint venture.

[qantas] 25/5/2023 08:16

Wig please be nice to debsdowner as it his chat line.
The price is the price and nothing on this chat line affects the price.

Please do your own research as always.

[philanderer] 24/5/2023 22:05

Analysts at ShoreCap told clients they believed they saw a "very attractive entry point" into Marks & Spencer's shares, given the increasing possibility of a rating expansion.

The food and fashion retailer's £482m of full-year profits before tax had smashed their estimate for £431m, on the back of a "major" beat on Food, alongside "strong" progress in Clothing.

And for the 2024 financial year, thanks to good trading momentum and further cost headwinds, they bumped up their estimate for pre-tax profit by 14% to £475m for earnings per share of 16.1p.

They were also anticipating a "modest" dividend payout for FY24, adding that the current price-to-earnings multiple on offer of 10.2 times was "modest", while the EV/EBITDA multiple was "lowly".

ShoreCap was the house broker for Marks & Spencer.

Sharecast.com

[wigwammer] 24/5/2023 20:53

Yes I bought some around 435p. I think theywill generate quite a lot of cash in H2 and have discrete assets like topshop they could sell on. They might need cash over next couple of years to accelerate growth but if they do it may be done at a higher price than where we are now. Asos is quite a unique asset as a sizeable online retailer, so would help diversify a retail strategy, and could attract corporate interest. IMO

[darrin1471] 24/5/2023 20:30

Wigwammer. Shorts are closing fast on ASOS.
Marshall Wace down from 1.68% on May 2nd to 0.45%


The ASC thread is a nightmare.
Are you holding Asos? What do you think of them?

[wigwammer] 24/5/2023 20:10

If you go back to when the shares were sub £1, debsdowner and another poster (shoe something) would spend a large part of the day peppering the board with anything and everything negative they could find on MKS... so I wouldn't usually call people out, but he is something of a special case.

[ccsicemanandrew] 24/5/2023 18:53

I would hope nobody buys and sells shares based on someone they've never met on a forum like this.People should do their own research and when you buy a share always have a decision on when to sell.And that means taking a loss or when to take profit.It makes me laugh reading some of the wild predictions people make without backing any of it up with evidence.

[darrin1471] 24/5/2023 17:28

Strong closing auction 4.8m at 184.75 in a wider falling market bodes well for tomorrow.

I think MKS will end up owning 100% of UK Ocado Retail and rebranding it. It makes sense for MKS and OCDO.

[wigwammer] 24/5/2023 16:09

You're about as trendy as bell bottomed flares, pal. And you should reflect on the point that you may have encouraged people to sell near the lows with all your nonsense. Warning to all holders - debadowner is now positive here...

[debsdowner] 24/5/2023 15:36

wigwammer, it's spotting the trend which few have.

[creditcrunchies] 24/5/2023 13:59

I think this will continue longer term probably 250 to 300

[philanderer] 24/5/2023 13:16

Splendid update and well received. The only blue one in my portfolio today.

‘It feels like the longest turnaround in corporate history, but there are finally signs that Marks & Spencer has struck the right formula. Rather than the usual story of strong food sales making up for weakness in clothing, both parts of the business are now doing well,’ said Russ Mould, investment director at AJ Bell.

[wigwammer] 24/5/2023 12:35

I very much hope that few people acted on your negativity, debsdowner, and sold near the lows. You should reflect on that.

[wigwammer] 24/5/2023 12:34

So having peppered the board with negative commentary at half the current price, debsdowner is now bullish.. couldn't make it up :)

[debsdowner] 24/5/2023 12:24

15% just reached.

Poor volume at over 8 million shares for a footsie 250 company

[debsdowner] 24/5/2023 12:21

Marks up 13.1% one of the best rises for a long time and expectations of a divi will motor MKS to circa £2 before long.

[xxxxxy] 24/5/2023 12:04

M&S suspended dividend payments at the start of the pandemic to protect the balance sheet, but the board now plans to restore a modest annual dividend, starting with an interim divi at the results in November.Richard Hunter, head of markets at Interactive Investor said: "While the initial dividend is likely to signal just a moderate return, it represents something of a return to form as well as being a signal of confidence from management in immediate prospects."... Yahoo Finance

[debsdowner] 24/5/2023 11:47

Analysts so far:

[debsdowner] 24/5/2023 11:33

CC good luck a profit isn't a profit until booked.

[creditcrunchies] 24/5/2023 10:54

It's a rule I use in the SIPP to bank profits to maintain my compounded growth target on my spreadsheet