Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

What You Were Selling Last Week: Marks and Spencer Group Plc (MKS)

LONDON — One of Warren Buffett’s famous investing sayings is “Be fearful when others are greedy and greedy only when others are fearful” — in other words, sell when others are buying and buy when they’re selling.

But we might expect Foolish investors to know that, and looking at what Fools have been selling recently might well provide us with an indication of investments that may be past their prime.

So, in this series of articles, we’re going to look at what customers of The Motley Fool ShareDealing Service have been selling in the past week or so and what might have made them decide to do so.

Marks and Spencer Group Plc (LON:MKS)

Decreasing profit, increasing debt
A couple of weeks ago, high street stalwart Marks and Spencer Group Plc (LON:MKS) revealed generally disappointing results for the year to the end of March 2013. Pre-tax profit had fallen by 14%, to 564.3 million pounds, debt had risen 37%, to 2.6 billion pounds, basic earnings per share were down 10% to 29.2 pence, and the dividend was being pegged. It was the second successive year Marks and Spencer Group Plc (LON:MKS)’s annual profit had fallen, and the lowest it had recorded since 2009.

Despite what seems to have been a poor performance over the past year, Marks and Spencer Group Plc (LON:MKS)’s share price is up more than 40% on June 2012 (helped to some extent by recent takeover speculation). At the end of May this year, its share price was already at its highest since the end of 2007, so perhaps some investors began to think to that the good times were over for now, and they put Marks & Spencer in the No. 9 spot in our latest “Top 10 Sells” list.*

And they’re not alone. As fellow Fool writer G.A. Chester noted a couple of days ago, according to the Financial Times, directors of Marks and Spencer Group Plc (LON:MKS) have sold an average of 7,600 shares during each of the last 36 months. True, there may be perfectly good reasons for some of the disposals, such as paying golf club fees or redecorating the country retreat. But such a long-term pattern of sales really doesn’t paint a picture of director confidence, notwithstanding boardroom pronouncements about expecting “a material improvement in free cash flow from 2014/15” and “delivering improved shareholder returns.” If the directors really believe their own story, they should be buying, not selling.

Half of Marks and Spencer Group Plc (LON:MKS)’s revenue comes from food sales, which have been doing well, up 4.9% over 2012’s results. But the other half comes from clothing and homewares sales, both of which have been decidedly lackluster for a long time — clothing sales have seen five quarters of decline in the last eight, and homewares is even worse, with seven quarters of falling sales over the same period. And there’s no real sign of improvement in either, as yet.

If Marks and Spencer Group Plc (LON:MKS) is to continue to provide rewards to shareholders, it absolutely has to deliver on its plan to transform the company into “a truly international, multi-channel retailer,” as promised in its annual results. But the company is already two years into a three-year plan to do that, and the results so far may not be convincing some investors.

The article What You Were Selling Last Week: Marks & Spencer originally appeared on and is written by Jon Wallis.

Jon Wallis doesn’t own shares of Marks & Spencer, and neither does The Motley Fool.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!