TODAY’S FAYRE – Thursday 7th April 2016


“She dwelt among the untrodden ways

Beside the springs of Dove,

Maid whom there were none to praise

And very few to love:

A violet by a mossy stone Half hidden from the eye!


Fair as a star, when only one

Is shining in the sky.

She lived unknown, and few could know

When Lucy ceased to be;

But she is in her grave, and, oh, T

he difference to me!”


William Wordsworth – poet – 1770 – 1850


First and foremost yesterday’s poem was written by GK Chesterton and Philip Larkin and also Larkin’s birth & death dates were incorrect. I think I am OK with Wordsworth today!


Nigel Farage and many voters are getting very hot under the collar that the Government has spent £10 million of taxpayer’s money on policy leaflets for the EU Referendum. Steady on boys and girls! The Government is tending to peak too early on the referendum. Let it sort out the unemployment in forestry. BREXIT has plenty of time to come in its spring coat!


There is still 10 weeks to go until the EU referendum and the temperature is rising by the day. Each day sees the academics and economists mass their troops with reams and reams of unaudited and speculative data on the damage BREXIT will do – mostly recently from highly regarded experts such as Hugo Dixon and Howard Archer.  Factually they know no more than the BREXIT brigade. It is all pure supposition and speculation from both sides. This referendum is about past history, disappointment, hopes, aspirations and the possibility of achieving success for the future. This vote centres around where the UK will be best placed in terms of safety, business environment, trade and emotional sovereignty and not hard-boiled guesswork, based on hunches from like-minded thinkers.


The Crabbie’s Grand National takes place on Saturday. Though he may not carry my money, ‘Many Clouds’ will carry my affections and good wishes. It would be great to see this fantastic race won by the same horse two years running for the first time since ‘Red Rum.’ He is a worthy ‘jolly!’ Also for Leighton Aspell to win it 3 years running would be unprecedented. Also trainer Oliver Sherwood is a top man and racing would salute him!


Yesterday many felt that UK equities may have been oversold on Tuesday so there was a reasonable rally yesterday with the FTSE 100 closing up 70 points at 6161. The shelving of the Pfizer/Allergan deal thanks to the US Treasury refusing to sanction any tax inversion deal, the drug sector received the fillip and speculation that was expected – Shire and Astra were up 5.2% and 4.5% respectively. However shares were near enough marked up across the board apart from airlines, where easyJet and IAG failed to satisfy the judge. easyJet may go into the red when figures are next reported.


Across the pond the Street of Dreams, courtesy of benign and dovish comments by the FED, which is still concerned about global growth and aided and abetted by a 1% hike in crude oil prices, saw all three main US indices purring like cats with contentment – even though it may be short-lived unless the 2nd quarter earnings season surprises and pleases investors. Few are on that bandwagon. In fairness if the Dollar remains weak as it currently is, who knows they may be better than many believe. Energy and healthcare had a run on the rails yesterday, lifting the three main indices as follows – DOW +0.64%, S&P +1.05% and that NASDAQ +1.59%. In Asia higher oil prices helped some Asian indices but the heinous strength of the Dollar has blunted any progress for the NIKKEI. At the time of writing the ASX closed up 0.4%, with the NIKKEI staggering above breakeven +0.2%. Just after lunch the Shanghai Composite was down 1.3% with the Hang Seng near enough flat at +0.1%. Samsung posted a decent effort with the Galaxy 7 flying the flag vigorously, though analysts fear this might be a one off – shares were down 1.5%. Today’s economic data is mainly US based with Initial Jobless Claims and Consumer confidence.


There were a few nuggets of news that caught my eye. Sainsbury, as a result of acquiring Argos, may sadly have to shed 870 jobs. Car sales last month hit record levels with the SMMT announcing a 0.2% increase in sales to 36394 vehicles last month. There has been talk of a revolt over BP’S Bob Dudley $19 million remuneration package. Think again and remind yourself what this man has achieved. Against disgraceful behaviour meted out by the US government on the Deepwater Horizon disaster, which cost the sunflower $40 billion, Dudley has kept the show on the road. Like millions of others I am spitting blood in ager against the ‘SPECIAL RELATIONSHIP!’ More to the point Bob Dudley’s relationship with the Kremlin has been such that the lid has been kept on any further fallout with Russia, thus maintaining BP’s joint venture with Rosneft in good shape. He is a regular visitor to Russia and strategically this has been fundamentally important. Dudley is highly respected in the corridors of power. He deserves every single cent of his bonus.


Now to the main dish of the day! MARKS & SPENCER! However Marc Bolland, who left as CEO on Friday, to be succeeded by Steve Rowe, the former head of General Merchandising, want to ‘spin’ these sales figures for the 13 weeks to 26th March 2016, they were awful – maybe slightly better than expected (EST -3.4% and Food +0.5%). General Merchandising actually came in at -2.7% and food as expected. Overall sales were up 1.9% on the period. Margins were between 240-250 basis points.


However the performance of this ‘Darling of the High Street’ in the past six years has been totally unacceptable. Yes, Marc Bolland, who took over in May 2010, when the share price was 329p, courted the press and analysts with ‘sweet nothings in the ears’, taking the share price up to 597p in May of last year, though they have fallen 30% to 425 (+1.25% on the day at 9.10am, having been up 2.8%). However, apart from great food, M&S have delivered nothing on any consequence.


The problem with M&S is the horribly dowdy fashions. Bolland’s predecessor Lord Stuart Rose and Bolland seemed to have had a blank spot over Kate Bostock who was in charge of fashion way beyond her sell-by date. She was replaced by Belinda Earl from Debenhams, hardly an emporium known for its sartorial elegance, nearly 4 years ago in September 2012. Sadly the fashions have not improved.


I confess to being somewhat perplexed as to why Steve Rowe has been appointed CEO by Chairman Robert Swannell and the board. After all it is Merchandising, Rowe’s responsibility, that has caused this mess. M&S has made £1 billion pre-tax profit twice – 1997 and 2007. Since then it has declined due to squeezed margins, a lack of inflation and fierce competition on the high street and on line. This year M&S will be lucky to make £660 million. So there is £150 million share buy back! – So what? On-line sales are 8.2% from a very low base. Concern was expressed that currency volatility had affected international business. This is a red herring. 80 new stores have been opened in the last year.


In closing when an iconic brand loses high street share it rarely if ever gets it back. M&S needs to merge with someone like NEXT pooling resources, cutting costs and concentrating on the areas they perform well in. I hope I am wrong but I don’t think M&S has grasped the nettle as to what is required from its fashions in the future.


David Buik

Market Commentator – Panmure Gordon & Co

D +44 (0)20 7886 2775

Mobile – 0044 7788 144 877

Panmure Gordon & Co


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