Should I Buy Marks & Spencer?

LONDON -- It's time to go shopping for shares again, but where to start? Motor insurance warship Admiral Group? Pipeline prince National Grid? Or major oil major Royal Dutch Shell?

There are loads of great stocks to choose from, and I've got my wallet out. So here's the question I'm asking right now: Should I buy Marks & Spencer (LSE: MKS.L  ) ?

Far from saintly Michael
Personally, I've never really bought into Marks & Spencer clothing. When I was young, I considered its clothes drab and uncool. Now I'm in my mid-forties, I still feel the same way, and I find its stores drab and uncool as well. I don't even buy cheap socks there any more. M&S food halls are a different matter. I must have eaten thousands of M&S sandwiches in my time, and there's room for more. But should I tuck into its shares?

Don't bank on this
Marks & Spencer is a little like that other long-standing U.K. institution, the BBC. They're both a bit auntie-ish, and although we wouldn't want to lose them, we like grumbling about them. Marks & Spencer has drawn flak for its recent "real women" advertising campaign, which was supposed to show normal women sporting its underwear, but in time-honored fashion industry style, accidentally substituted them with skinny supermodels.

I'm equally unconvinced by its new Premium Current Account, which carries a hefty fee of 20 pounds a month. M&S claims that benefits such as worldwide travel insurance, M&S shopping vouchers, loyalty points, and a 6% savings account are worth more than 500 pounds a year, but that's only if you use them all. Packaged bank accounts are all news anyway. Like other recent entrants, such as Metro and Virgin, I don't see M&S breaking the banking mold, especially when you discover that M&S Bank is a wholly owned subsidiary of HSBC.

Mark my words
Food aside, my worry about Marks & Spencer is this: What's the point of it? If you want cheap, cool fashion, Primark does it better. Even people in their 30s and 40s dress like teens these days, which, again, rules out M&S. That leaves a relatively older demographic, who tend not to spend as much. And why would they, in such a dreary environment? Last time I blundered into M&S clothing, I had to check it wasn't a charity shop. Recent bleak sales updates suggest I'm not the only one who feels this way.

A sandwich short of a buy
Marks & Spencer has spent years trying to pull off one of the hardest tricks of all -- buffing up its image to attract new customers, while clinging onto the old ones. It has subjected itself to fashion makeover after makeover, but still hasn't succeeded. At 394 pence, its share price remains 50% lower than before the financial crisis, although it did rebound in recent months, on talk of a private equity-backed takeover. I've absolutely no idea whether there will be a bid, but I would ask this question: If you had 6 billion pounds, would you spend it in Marks? Trading on a 4.3% yield, covered 2.1 times, the stock may still tempt income seekers. You can buy it on a modest forecast price-to-earnings ratio of 10.9 times earnings, but personally, I won't. I'll stick to the sandwiches.

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Harvey Jones owns shares in Royal Dutch Shell. He doesn't own any other shares mentioned in this article. The Motley Fool has a disclosure policy.
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