Spread Bet on Marks & Spencer Shares
Marks & Spencer, also known by a variety of other names such as M&S, or Marks and Sparks, is an iconic British clothing and luxury food retailer head-quartered in London, with the majority of its stores in the UK but also several hundreds around the world. It specializes in clothing and in upmarket food products. It was founded in 1884 by, predictably, Mr. Marks and Mr. Spencer.
Marks and Spencer (MKS) was originally the UK high street’s premier retailer of the day. Over the years there have been many changes. In the early 20th century, the stores sold only British made goods, but this policy was discontinued in 2002. The St. Michael brand was started in 1928, in honour of Michael Marks, one of the original founders, but that branding was finished in 2000, and replaced with simple Marks & Spencer.
It has become known as a better type of retailer, with customer service that included the return of unwanted items for a full cash refund regardless of how long the product had been owned. Even this policy changed to a 90 day returns policy in 2005 and 35 day policy in 2009. All these changes were brought about after the profits began to decline at the end of the 20th century.
M&S has always tried to put the customer first, with its 1953 slogan “The customer is always and completely right!” exemplifying the attitude. It was one of the last major stores to accept credit cards, finally allowing them in 2001. Now it has branches in Dubai and China, as well as more locally to the UK in France. In the early part of the 21st century there have been major overhauls in an attempt to update the image and recapture the market share. Despite a drop in the share value, more than halving in the economic crisis of 2007 – 2008 due to reduced consumer spending, the share price has kept between 300 and 400 for several years, and in the midterm it appears to be trading in a range.
Comparing Marks & Spencer and Next PLC I cannot keep wondering. M&S is a huge brand, Next PLC are still relative minnows. I am not sure I understand how Next can be making so much profit. Many retail companies are going under or issuing profit warnings. Marks and Spencer’s (LON:MKS) itself reported that profits were down for the first time in 3 years while it cut its sales growth targets because of the uncertain economic outlook recently. I just cannot see Next escaping the downturn in retail sales. Majority are now feeling the pinch especially with rocketing motoring costs, high inflation and pay freeze etc. I take my hat off to them if they continue defying the odds though.
Marks & Spencer now expects to increase revenue by £1.1 billion to £1.7 billion in 2013, after originally targeting growth of £2.5 billion.
Note: In the late 1980’s M&S were the first British retailer to make a £1bln profit (£5bln in today’s money) when today they make less than £1bln which means over the past 20 years M&S profits are down 80% in real terms.
Visitor Observation: Quality is now so poor compared to what it was , my wife bought me some socks recently after 3 washes ready for the bin. More proof bought blue harbour shirts 8 years back been washed continuously terrific quality still using them looked recently at similar doubt if they would last 9 months.
Editor Comment: Nowadays, because fashions change, very few manufacturers would make clothing items that would last 8 years. They would go out of business due to lack of repeat orders and the higher production costs involved. Similarly retailers need turnover and customers, not visitors telling their unoccupied staff that they are still wearing the shirt they bought from them 8 years ago.
How to Spread Bet on Marks and Spencer Group Shares: Rolling Daily
The price of M&S has been unexciting recently, making it look relatively safe for a novice trader. However, retailers can react quickly to quarterly sales figures, and you should be careful not to expose yourself to more risk than you are happy to take. The current price for a rolling daily bet is 343.96 – 344.84. If you think that the price will go up in the near future, then you would want to place a long bet at the higher (buying) price of 344.84. Say you wagered £20 per point.
In a few days, you might see that the price has risen to 362.91 – 363.79, and decide that you want to take your winnings. You would close your bet at the selling price of 362.91, and then work out how much you have made. Your spread bet was placed at 344.84, and it closed at 362.91, a gain of 18.07 points. If you multiply this times your stake, you find you have won £361.40. As this is a rolling daily bet, you might find that your account has been charged a small amount each evening when the bet is rolled over, but this is usually not significant.
It’s quite possible that the price would go down after you placed your bet, as it is hard to predict the markets with any certainty. Say the price went down to 320.12 – 321.00, you could close your bet and accept your loss before it got any larger. The starting price, as before, was 344.84, and this time the bet closed at 320.12, a loss of 24.72 points which would cost you £494.40.
Many spread betters use the stop loss order to close out a losing trade automatically, saving them from having to watch the market all the time. If you had used one of these, you might find that your spread bet was ended when the price was 331.62 – 332.50. The difference between the starting price of 344.84 and the closing price of 331.62 is 13.22 points, so in this case you would have lost £264.40.
Marks & Spencer Group Futures Based Spread Bet
Instead of wagering on a daily price, you may be interested in spread betting on a futures style price, which does not involve your spread betting broker rolling over the bet and any necessary charges it incurs. Of course, you do not get anything for nothing, and usually there is a larger spread, which equates to a greater fee, on a futures style bet. But if you intend to hold the bet open for a few weeks or months, then it may be worthwhile.
The current spread betting quotation for the far quarter is 344.75 – 349.01. If you want to take the midterm view that the price will drop, you could place a short or sell bet for £18 per point at the selling price of 344.75. Assuming you are correct, you might choose to take your winnings when the price falls down to 322.16 – 326.10. This gives you a gain of 344.75-326.10 points, or 18.65 points, and multiplying this times your bet of £18 you find you have won £335.70.
Many times you will find that the bet does not work out, and that you have to close your bet for a loss quickly, before the price moves too far. Say the price went up to 358.82 – 362.15, and you chose to close your bet and accept your loss before it became any greater. Your spread bet closed at 362.15, and was placed at 344.75, giving you a loss of 17.40 points. For your chosen size of stake, this would have cost you £313.20.
Another way that you can get out of a losing trade is to place a stop loss order with your spread betting broker. This tells him to close your bet if you lose a certain amount. If you had done this, perhaps it would close your trade when it went up to 352.65 – 356.18. Working out how much you lost this time, 356.18 minus 344.75 is 11.43 points. Multiplying by £18 per point, you would have lost £205.74.
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