Marks and Spencer Group PLC (LSE:MKS) is in much better shape than its recent share price wobble suggests, according to veteran retail analyst Clive Black at Shore Capital, which he believes is 'uncalled for, anomalous but a good entry price opportunity for investors'.
In a research note following a meeting with the retailer’s top brass, Black said M&S has made “material self-improvement” but still has plenty of growth potential left to unlock.
While shares have dipped 16% over the last three months, Black argues this drop is unjustified - particularly given the ongoing strength of the Food business, which continues to gain market share.
The analyst dismissed concerns that recent bad news from Asda, which warned of falling profits and weak food sales, should drag down M&S. It is also now lowering prices to increase market share.
He points out the two chains have little customer overlap, and Asda’s heavy discounting on branded products is unlikely to impact M&S’s more premium, own-label offer.
In Clothing & Home, M&S has been quietly transforming how it operates, boosting full-price sales and overhauling its product range.
There’s still work to do - only about 30-40% of the plan has been implemented - but the foundations are solid. The arrival of John Lyttle, with experience from Primark and Boohoo, is seen as a big plus.
While cost pressures are mounting - thanks to the national living wage hike and a new packaging waste scheme - M&S is well positioned. It’s already delivered nearly half of a £500m productivity drive and has the financial firepower to keep investing.
Its balance sheet, once a source of worry, is now a strength. Capital spending is covered, and big liabilities like pension contributions and the Gist logistics earn-out are either shrinking or fully funded. There’s even room for more generous dividends in time.
For Black, the real story is a business with strong momentum, disciplined management and long-term upside. Investors just need to see past the noise.