Marks & Spencer to play down £750m cash call on shareholders
Apr 6 2010 by Chris Knox, The Journal
HIGH street giant Marks & Spencer is set to play down speculation of a £750m cash call on shareholders this week, it has been reported.
Sources close to executive chairman Sir Stuart Rose are reported to have said that there is “no need” for a major fundraising, following an improved trading performance from the business.
Some analysts have said incoming chief executive Marc Bolland – who joins from supermarket Morrisons next month – could use the funds raised from a rights issue to kick-start an overhaul of the retailer.
But the cash call would come after a tricky period which has already seen shareholders faced with a dividend cut.
Relations with major investors were soured by Sir Stuart’s controversial dual role as executive chairman and chief executive against City best practice.
He will retain the role while Mr Bolland beds into the business.
Marks & Spencer, which has been unavailable for comment, is due to post another improvement in sales with its latest trading update on Thursday, which covers the 13 weeks to March 27.
The retailer, along with many others, posted its first like-for-like sales growth in more than two years in the quarter to December 26.
But it is cautious about prospects this year amid growing pressure on consumers.
Sales this time around should benefit from a quirk of M&S’s reporting calendar which puts the first day of the company’s post-Christmas sales into the traditionally quieter final quarter of its financial year.
Although January’s snow hampered trading, M&S managed to keep most of its stores open, and analysts at Investec currently expect results in May to show pre-tax profits of £625m.
This would be a slight improvement on the £604.4m reported the previous year, but still well below the £1bn seen in the year to March 2008 before the recession punished the high street.
