M&S shares are up 80% this year but can they keep rising?

Chic: Sienna Miller has become a new face of M&S as its clothes strike a chord again

Marks & Spencer stepped into Christmas this week, unveiling its festive gift lines and its fashions, modelled by Sienna Miller.

The film star is the new face of womenswear at the 139-year old High Street chain.

Miller looks elegantly edgy rather than frumpy in the coats and jumpers, highlighting the new, more adventurous vibe at M&S, which moves up from the FTSE 250 back into the FTSE 100 on September 18.

In tune with this more assertive stance, M&S is also taking its fight with Housing Secretary Michael Gove to the next level, determined not to be thwarted in its ambition to redevelop its Marble Arch flagship. Gove has refused planning permission.

But M&S is also concentrating on Christmas, an important season for all retailers, when it will be offering four different homeware decor looks such as Classic Heritage, Enchanted Forest, Icelandic Retreat and Kitchen Disco which involves a lot if glitter.

The £199 silver leather trousers from the winter collection would supply extra sparkle.

The return of M&S shares to the FTSE 100 also presents investors with some intriguing options.

Its shares have risen by 80 per cent to 221.9p since the start of the year, thanks to a bounce in full-year profits – and the expectation that 2024 could also be bountiful. Is this price bounce as good as it gets? 

Or could M&S appreciate further?

The chain is upgrading its store network and striving to further boost its clothing market share from its current 9.3 per cent by amping up the chic of its own-label merchandise, while adding more third-party brands.

Hobbs, Nobody’s Child and Sosander are among the names are already available.

Jonathan De Mello, of the JDM Retail consultancy, says: ‘M&S is performing really well, delivering value growth in fashion – but also volume growth which is what you want to see at a time of high inflation.

‘ Behind the scenes, the business is also being buffed up, under the leadership of joint chief executives Stuart Machin and Katie Bickerstaffe and Archie Norman, the chairman.

Debt has been reduced, as Shore Capital points out, and the £255m acquisition last year of logistics provider Gist is improving supply chains in the food division.

M&S shares climbed substantially over the past year and doubled since last autumn’s lows

M&S aspires to raise its grocery market share from 3.4 per cent to 4.5 per cent over five years.

In theory, this would be facilitated by a more bravura performance from the joint venture with Ocado, whose failings are a source of particular ire for Machin, Bickerstaffe and Norman.

But De Mello contends that selling more food will depend on attracting more customers into stores, with ‘remarksable value’ and variety as the British are turning away from online grocery shopping.

Rosie Huntington-Whitelely has collaborated with M&S on lingerie

Here I will admit to watching what other customers are buying in the M&S food, clothing and home departments. 

I used to be merely interested in consumer habits. But now there are now other grounds for my curiosity.

Last November, as I wrote in this column, I finally became an M&S shareholder. 

This was based on the calculation that most of my wardrobe comes from M&S and I also shop there for my family’s food and home items.

I believe in the benefits that can flow investing in what you know, although this is not a firm and fast rule since claiming familiarity with the workings of tech groups would be impossible for the outsider.

My stake is now worth 84 per cent more, which is gratifying.

But I also note that the shares are still down by 25 per cent over five years, and by 55 per cent over 10 years, illustrating the travails of this retail stalwart over that period.

Some shareholders will remember that M&S shares reached 707p in April 2007, when M&S was in the fashion ascendancy and Layer Cake star Miller, 41, was the cover girl of the September issue of American Vogue.

Analysts do not expect that the shares are set to attain their highs of 2007. The most optimistic target price is 300p. 

Most rate the shares as a hold, which is what I intend to do, while snapping up a few more.

The reasons for my optimism are the retailer’s ability to remain resilient and innovate amid a cost of living crisis. The latest clothing is another.

The autumn and winter coats, some of them sported by Miller in the new campaign, should appeal to women who want something more formal than the puffer jackets of the pandemic epoch.

They certainly appeal to one particular coat-loving woman – me.

My eye for a bargain – which means that I watch out for the reduced yellow label stickers in foods – means that I am considering other ways into M&S, such as the Temple Bar investment trust whose shares are at a 7 per cent discount to the net value of its assets.

These holdings are great British names– including a chunk of M&S which the nation is taking once more to its heart.

This post first appeared on Dailymail.co.uk