Company in the news: Marks & Spencer

published 12 July 2013

Food good; clothing bad. It's the same old story from Marks & Spencer (LSE: MKS). Investors have been waiting for years for the clothing business to turn around and it looks like they'll be waiting for a good while yet. In fact, with so much competition out there, betting on M&S reasserting itself in this market requires some bravery.

Food remains the company's strong point. It is doing well here and gaining market share. So it might actually be better for M&S to stop selling lots of the sort of clothes that customers don't particularly like and devote more of its selling space to food.Whether a lot of its high-street stores are suited to this sort of switch, though, is another matter.

And despite media bearishness on its clothing, M&S is not in bad shape. The shares are not particularly cheap on a price/earnings (p/e) ratio of 13.7 times, but the near-4% dividend yield is worth having.

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Verdict: buy for income

Phil spent 13 years as an investment analyst for both stockbroking and fund management companies.

After graduating with a MSc in International Banking, Economics & Finance from Liverpool Business School in 1996, Phil went to work for BWD Rensburg, a Liverpool based investment manager. In 2001, he joined ABN AMRO as a transport analyst. After a brief spell as a food retail analyst, he spent five years with ABN's very successful UK Smaller Companies team where he covered engineering, transport and support services stocks.

In 2007, Phil joined Halbis Capital Management as a European equities analyst. He began writing for MoneyWeek in 2010.