Stock of the Week: Marks & Spencer

Shares in the food and clothes retailer have struggled in recent years, but Morningstar analysts are upbeat about its tie-up with Ocado

James Gard 17 December, 2020 | 11:29AM
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Post-It Note

A fall in clothing and food prices was behind a drop in inflation figures to 0.3% in November, according to this week’s figures from the Office for National Statistics. Our stock of the week, Marks & Spencer (MKS) sells both clothes and food, a mixture that puts it in competition with the likes of former stock of the week Tesco and high street and online fashion retailers. Food retail has had a boost during this year’s multiple lockdowns and the largest listed grocers are posting strong sales figures this year, but clothing has suffered from the closure of physical sales outlets.

Marks & Spencer has found that balancing act between food and clothes difficult in recent years, and that’s been reflected in financial results and a weakening share price. The latest set of half-year results in November, revealing a pre-tax loss of £87 million, showed the outperformance of food and weaker sales of clothes and homeware products. With many commuters staying at home for much of the year (and not needing to upgrade their work wardrobe), Marks & Spencer like other retailers dependent on city and centre footfall, has been hit by this sudden change in consumer behaviour.

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James Gard  is content editor for Morningstar.co.uk

 

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