News from the City
Published:  13 January, 2006

M&S share price rockets

M&S SHARE price has boomed to over £5, its highest level for seven years and substantially higher than the £4 per share offered for M&S in 2004 when Philip Green, the owner of the Arcadia Group, launched a bid valuing the company at £9.1 billion. Stuart Rose, who was hired to fi ght off the bid, has been steadily turning M&S round by renegotiating supplier contracts, slashing stock levels and reducing the number of mark downs. The latest sales figures, which include the key Christmas period, show overall sales up just under 1 per cent on a like-for-like basis. The big growth sector was food. Sales grew

by 5.1 percent in the third quarter and remained strong over the key Christmas trading period.

Food accounted for just under 50 per cent of sales. With no big discounts on offer, the bottom line should be boosted for the full year's results. Clearance stock was also down 35 per cent on the previous year. Commenting on the results, Mr Rose, said: "We have re-established our credentials with our customers and offer value." Responding to criticism that the new store layout

could be puzzling for customers, he replied: "Marks&Spencer is a broad church. 15 million customers a week visit our stores and find what they want."

M&S is in the middle of a store development programme and expects to have over 30 per cent of its portfolio of stores in the new format by the end of this year.


WAL-MART, the world's biggest grocery retailer and owner of Asda in the UK, disappointed the market, posting sales for December 2005 at the low end of forecasts - 2.2 per cent. Market analysts had been predicting growth of at

least 3 per cent. Wal-Mart's poor sales performance took place despite slashed-to-the bone prices during the Christmas holidays.

Street-wise customers waited until just before Christmas to buy as prices were slashed ever deeper from the substantial discounts offered at the beginning of December, hitting profitability.


J SAINSBURY was due to announce its trading update yesterday with the market banking on an uplift in sales of 3 to 3.5 per cent. Analysts

reckon Sainsbury is on track to overtake Asda and return to its former position as the UK's second largest supermarket.


TESCO HAS put the stockmarket's collective mind at rest after Sir Terry Leahy, chief executive, re-assured analysts he has no plans to buy a large US

store chain. Analysts had been speculating that Tesco had been talking to Albertson's, the US supermarket group that is up for sale. Sharp-eyed

analysts have, however, picked up on the fact that Sir Terry has not ruled out a US invasion entirely. Tesco has been pursuing a successful policy of

buying chains in emerging markets with little in the way of competition rather than buying into mature markets with entrenched competitors. Grocery retailers located near Co-operative stores could see a pick up in sales as

Co-op employees threaten strike action over changes to their fi nal salary pension scheme. The Co-op management wants to base pensions on an employee's average salary over his, or her's, working life instead of being based on final salary.