Marks & Spencer share price dips as gift cards replace dividend

on Mar 9, 2015
Updated: Oct 21, 2019

Marks & Spencer’s (LON:MKS) share price has declined today after media reports revealed a planned change in the group’s dividend policy. According to The Telegraph, shareholders are to be offered the option of a discounted gift card instead of a dividend payment.

Private investors will be able to swap their dividend payment to buy credit on an ‘M&S Shareholder Card’. Shoppers using the card to buy goods in stores will receive a 10 percent discount and will be able to hold £1,000 on it. This means that a shareholder could swap a £900 dividend payment for an M&S gift card worth £1,000.
The retailer previously offered shareholders a collection of vouchers. Last year, this included a general 10 percent discount voucher, £2.50 to spend in an M&S café, and a number of smaller vouchers for clothing and food. Participation in the new scheme is optional and investors who decide not to sign up will still be offered a collection of vouchers. Those who do participate will be able to choose how much of their dividend payout will be put towards a gift card.

Marks & Spencer is introducing the ‘M&S Shareholder Card’ scheme with Equiniti, a company which manages shareholder registers. Shoppers will be able to use the card in M&S stores and online, but it will be exclusive to M&S shareholders. About 190,000 investors will be notified about the changes this week. The closing date for applications will be mid-June and the cards will be issued in July, in line with the final dividend payment.

The initiative is being launched on the back of research that found M&S shareholders would like the retailer to do more to link shareholder benefits with shopper perks. M&S group secretary Amanda Mellor said, as quoted by The Telegraph: “Our private investors are also some of our most loyal customers and we’re continually looking at how we can best engage this important group of stakeholders. We’ve listened carefully to their feedback and believe that in the new Equiniti scheme, we’ve identified a simple mechanic that rewards their investment in the company.”
By 13:33 GMT, Marks & Spencer’s share price had fallen 1.14 percent to 505.17p. According to the Financial Times, the 25 analysts projecting 12 month price targets for the FTSE 100-listed retailer, have a median target of 500.00p, with a high estimate of 570.00p and a low of 350.00p. As of 7 March 2015, the consensus forecast amongst 41 polled investment analysts covering Marks & Spencer has it that the company will outperform the market.
As of 14:29 GMT, Monday, 09 March, Marks and Spencer Group Plc share price is 505.75p.

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