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Two of the world’s most powerful investors are betting against Marks & Spencer in a blow to its new chief executives.
The Mail on Sunday can reveal that BlackRock, the world’s biggest asset manager, and hedge fund Marshall Wace are shorting the retailer’s stock.
The funds have disclosed the combined £35million short position just weeks after the retailer announced that food boss Stuart Machin will become chief executive, alongside Katie Bickerstaffe.
Blow: BlackRock, the world’s biggest asset manager, and hedge fund Marshall Wace are shorting Marks & Spencer’s stock
The pair will replace M&S veteran Steve Rowe next month in an unusual joint arrangement where Bickerstaffe, whose title is co-chief executive, reports to Machin.
Short-selling is a way of betting a share price will fall. Traders borrow shares, sell them and then buy them back, ideally at a lower price, before returning them to the owner and pocketing the difference.
The shorts by BlackRock and Marshall Wace come as M&S has seen its stock tumble in recent months. The shares are down 37 per cent this year, valuing the business at £2.9billion.
Retailers are facing multiple challenges, including rampant inflation which is pushing up wages and energy costs, as well as squeezing consumer wallets.
Machin is credited with aiding Rowe and chairman Archie Norman in starting to turn around the long-troubled retailer, which underwent a revamp during the pandemic.
M&S saw food sales advance over Christmas and clothing sales have been boosted by stocking outside brands.
The company is expected to confirm next month that its joint food delivery venture with Ocado is hitting targets. But the share sell-offs and short positions – the first bets against M&S disclosed since December – indicate the City is unconvinced of its prospects under new management.
BlackRock Investment Management is betting against a string of consumer-focused stocks including Sainsbury’s, Dixons and B&Q owner Kingfisher. Marshall Wace, chaired by Sir Paul Marshall, is targeting online retailers Asos, Boohoo and AO World.
Richard Hyman, partner at retail consultancy TPC, said: ‘The M&S leadership team has focused too much on food and not enough on investing in fashion – which is higher margin.’
M&S’s decision to employ an unconventional management structure has created uncertainty. Hyman said: ‘It strikes me as a cop-out. It’s very difficult to have two chiefs.’
M&S, BlackRock and Marshall Wace declined to comment.