US Edition 
Questor share tip: M&S clothing sales show glimmer of hope
Imagine what could happen to the profits and share price if M&S were firing on all cylinders. Hold
Marks & Spencer
435.5p
Questor says HOLD
Backing Bolland
Food, glorious food
While supermarket competitors are suffering from discounters taking market share, M&S’s food business continues to grow and has done for four years. At the moment M&S is fighting with one hand tied behind its back. While the food business continues to grow, the clothing business has struggled. For 11 consecutive quarters, or almost three years, the general merchandise division has reported falling sales. The company said general merchandise was down 0.6pc in the most recent quarter. Revenue at M&S is split roughly half general merchandise and half food sales.
Retail recovery
There was a glimmer of hope in last week’s trading update. In a break from tradition, the company split out its clothing performance from the wider general merchandise division. The company said that like-for-like sales in clothing increased by 0.6pc. That isn’t much to write home about, but it is important as the retailer has put womenswear at the centre of its revival. M&S chief executive Marc Bolland said he was “particularly encouraged by womenswear, which is showing a clear sign of improvement and performed ahead of clothing”.
Profit focus
The important thing for investors to focus on is profitability. M&S may be selling more clothes, but at what price? If the company is slashing prices to shift stock then profits will fall. Investors will get more detail when all is revealed in the annual results on May 21. Market consensus is for M&S to report sales of £10.3bn, pre-tax profits of £622m, and earnings per share of 31.2p. That leaves the shares trading on 14 times earnings and at a premium to rivals Tesco and Sainsbury’s. The shares offer a dividend yield of 3.7pc, but given the profit pressure they remain a hold.