Comment: Mixed messages from an icon with feet of clay

Online goes from strength to strength and the 1.8 per cent Q2 slide in general merchandise sales, with their clothing spearhead, is a marked improvement on the 6.8 per cent slump in the previous three months.

Add in the positive that, in these historically low interest rate times, the dividend yield on the company’s shares of 4.3 per cent is a definite investor attraction.

And yet, it is still not entirely clear how well M&S has got over the merchandising issues that scarred its results earlier this year, profit margins and profits remain under pressure, and it would be strange if a string of recent management changes had not been disruptive.

Following the exit of Kate Bostock last month, M&S veteran John Dixon is now at the general merchandise helm, which also includes homewares, Frances Russell has just been promoted to head of women’s clothing, and Janie Schaffer has just been hired as director of lingerie and beauty from the US chain Victoria’s Secret.

M&S’s shares have risen 14 per cent in the past three months compared to a 1 per cent rise in the wider FTSE 100, but this arguably owes as much to the takeover speculation that continues to dog the group than a strong underlying performance.

In short, after well over two years in the job, chief executive Marc Bolland’s attempted revitalisation of the retailer is not the finished article. It remains a work in progress.

The most optimistic view is that Bolland is making M&S an international, multi-channel retailer, a strategy that will come good over the next couple of years even if it is being buffeted by short-term headwinds such as exceptionally poor weather, the chronic UK downturn. and management issues.

A less sanguine take is that M&S has been in a state of almost perpetual “revitalisation” over more than a decade, including under Bolland’s predecessor, Sir Stuart Rose, and Rose’s predecessors, including the Belgian Luc Vandevelde. Improvement has been incremental, not transformational. And Bolland’s blueprint is far from a guaranteed success.

Addressing this mixed bag, I believe the shares are at best a hold if you’ve already got ’em, but not a buy if you haven’t.

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