Shore Capital believes that it will be ‘a couple of years’ before Marks & Spencer Group (LON:MKS) sees any benefit from its deal with Founders Factory, Citywire reports. The joint venture partnership, announced earlier this week, will focus on discovering and developing start-ups.
Marks & Spencer’s share price has slipped marginally into the red in today’s session, having given up 0.39 percent to 307.80p as of 10:31 BST. The stock is fractionally outperforming the broader UK market, with the benchmark FTSE 100 index currently trading 0.55 percent in the red at 7,666.32 points. The group’s shares have lost more than four percent of their value over the past year, as compared about a three-percent gain in the Footsie.
ShoreCap weighs in on digital deal
Citywire reported yesterday that Shore Capital’s analyst Clive Black had retained his ‘hold’ recommendation on M&S after the company announced earlier this week that it was launching a joint venture partnership with Founders Factory. The deal will see the FTSE 100 group become Founders Factory’s exclusive UK retail partner, and invest in a number of start-ups.
Black noted that while he was ‘encouraged’ by the announcement, the clear message was “that it would take a couple of years for the change programme now well underway to start to yield notable, hopefully positive, financial output”.
‘No small amount of scepticism’
The analyst further pointed out that while the broker was “happy to record new joint ventures,” it also had “the reality of a group where earnings are side-lining, the stock valuation multiples are compressed by years of disappointment with no small amount of scepticism among the investment community”.
Earlier this year, M&S unveiled a partnership with Microsoft to test artificial intelligence in a retail environment, as it continues with its transformation under chief executive Steve Rowe.