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Shorters could get a real shafting soon. Last week food sales in M&S were up on the year, excluding Ocado sales. Don't know how well that performed, but appears that there hasn't been any cannibalisation of sales. Ocado lifted Waitrose total sales by around 20%, so if replicated in M&S could be absolute game changer
Do we think that this malaise in price is based on placing rumours or that there has been some substantial profit taking?
Have seen the pattern before where price rises, couple of positive RNS's then the drop and the placing. Don't think that it is needed this time, so suspect it's more to do with profit taking, especially as on cusp of big things.
What are opinions of my follow LTH's who I have lot of respect for?
I believe that rates saving is over £100m, but think that was original estimate and honestly can't remember the source.
Think Furlough scheme is around 80m as well.
The other bits that seem to be forgotten is that M&S own a lot of property, and whilst closures probably needed where they own a lot of stores, these could be converted from retail to residential. If they became landlords then would be great source of income for them.
But would agree with a few on here that the pace of change needs to be so much quicker for the city to start moving the share price. Long term price still for me is £3-4, but that is probably a couple of years away
Pretty much. I reckon that further restructuring is still to happen though, but will now wait till after Christmas. At some point I would expect an announcement that they are cutting ties with their food logistics partner and taking it in house, which the new MK distribution centre is first step towards. Depends though on penalty clauses linked to the ridiculous contract that they signed. This then allows easier network for Ocado tie up for them. Will also open greater cost savings in logistics
Simple facts here are that the business handed to Steve Rowe was an absolute bag of spanners.
Lack of leadership, no future proofing and vanity projects galore. I have stated previously that some of things that have happened under Steve have not been right. Store closure programme to slow and continuous writing off money to pay for it just haven't sat right.
But what he has been doing is securing the foundations of the business, and long term the business will grow. They are still doing decent profit every year, and stabilising that at around 400m a year should get them to £3 a share. No pension deficit and reducing debt, Ocado tie up, property portfolio that they own all show that it is a healthy position whilst others fall by the wayside.
Anyone investing now is purely gambling. LTH been screwed as usual by an AIM company.
There is a chance that this will get the good old dead cat bounce, but reckon that happened when it spiked to 0.2 the other week. If you do choose to go for the gamble, be happy to only put in what you won't miss
That BBC article was absolute tosh. Couple of bits were accurate but nothing in the business going forward. The bit that people don't see with the Ocado deal is that it will transform the logistics of the food business and how stores are supplied. Delivery business will be good but the real money in the Ocado deal is the IT infrastructure and transformation that it brings to M&S systems. Clothing is still a basket case but the cost base for that is slowly coming down.
Steve Rowe has made a few errors in his management of company, and I'm a big critic of his, but he was handed a company in a far worse position than it is currently in. Not to eay that he is not still beyond criticism, and taking a £144k bonus whilst accepting furlough money from the government and then making 950 redundant is not a good look.
In a couple of years the business will be better, but current price is fair based on what is still needed to be done
Hi Jack,
I'm a LTH, and very positive about this share. I do like that you have a contrarian view to most and I believe that your warnings are accurate to a point. But where I may disagree slightly is that within a year one of the assets that they hold will be producing and therefore allow for current finances to be sufficient for them to follow through with their other assets. At worst, they will be generating enough cash to open up other means of funding rather than continued placing and dilution.
But I think that it is important to have a well researched counter point to some others that may be over excited and don't point out some of the risks that are attached to this share.
Michael
Ocado is going to transform M&S food. They are opening massive warehouse in Milton Keynes in September, which when fully operational will see M&S looking to get out of Gist contract. See variable pick to stores which will transform their waste overspend which has opportunity to add 100m to bottom line. Whilst the food delivery from Ocado is welcome, the technology that they bring is the real game changer.
Think that lots of people have profit taken and now just waiting on DoJ case. So expect a malaise now for a bit. I top sliced at 100% profit so now in for a free ride and whatever the result of the DoJ case. Been a good company to invest in though
I have been watching this share for a while, but never posted here or yet to dip my toe.
As I see it, this share is black or red on the roulette wheel. If they get through the end of July and secure funding then is a viable company once lockdown in SA and Zimbabwe is over, if not then it goes tits up. I like a little gamble so will put a bit in, but only what I am prepared to lose. I would not recommend this as a share though anymore than I'd tip the 3.35 at Ascot today
They are going to announce in region of 400m profit before tax. (Probably do another load of write downs though as they seem to every year at moment) Currently losing 6-8m a week in Covid, which will probably mean Outlook for this year is around 150m PBT assuming that can start to trade clothing a bit more aggressively in future months. Food takings are around 8-10% up at minute vs normal times, but that is behind food retail market.
Ocado deal in September will help as that shouldn't deflect from retail business.
Company is still relatively sound and is well placed to see this out, and maybe they will actually speed up their closure programme at end if this, as the have already written off 680m in last three years