US fund increases stake in M&S

BRANDES, the Californian fund management group that is the biggest shareholder in Marks & Spencer, has continued its recent buying spree at the troubled High Street retailer.

It increased its stake from 11.1% to 12.5% last week. The move came after M&S announced disastrous trading figures, heightening concerns that its much-hyped turnaround was running out of steam.

Brandes buys shares in companies it regards as undervalued or overlooked. With $76 billion (£43 billion) under management, it has built up a 5% stake in J Sainsbury, another troubled retailer, and is also the biggest shareholder in steel group Corus, where it owns 15.1%.

Brandes has been a canny purchaser of M&S shares,

buying when the price was low. The American group first emerged on the share register in 1999 as M&S plunged into crisis. It carried on stakebuilding as the extent of the problems at M&S became apparent.

But in 2002, as the shares recovered on hopes of a turnaround, Brandes started to sell its stake, pocketing handsome profits.

M&S shocked shareholders this month when it warned that like-for-like sales in its core non-food division had fallen 5.2% in the 11 weeks to March 27. The problem area remains womenswear. M&S recently promoted former Selfridges boss Vittorio Radice to run the division. But analysts also noted that the previously resilient food division was also struggling.

Some shareholders have also expressed concerns that chairman Luc Vandevelde is not spending enough time at M&S.

Renewed problems at M&S have heightened speculation that it may become a bid target for the likes of BhS owner Philip Green or a venture capital group.

Analysts are sceptical about rumours concerning Green. Adding M&S to his existing stores would be likely to bring a challenge from competition authorities. Green has never mounted a hostile takeover bid - and M&S is highly unlikely to agree to an offer.