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This Data Makes Me Want To Buy Marks And Spencer Group Plc

Do you shop online? The answer’s probably ‘yes’. But do you shop online for clothes? The answer still may be ‘yes’ but it is less likely and, according to July’s retail sales figures, it is now less likely than it was in June.

Indeed, online retail sales fell for the first month in 13 years in July, apparently as a result of hot weather luring shoppers away from the high street. Internet sales fell by 2% between June and July, while at the same time physical stores showed strong performance.

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However, to me that doesn’t make sense at all: surely the hot weather should have made more people shop online and avoid the heat rather than the other way around?

Certainly, I can understand that people may wish to buy ‘summery things’ such as T-shirts, shorts, barbecues, etc. However, I would have thought that buying online would be more preferable in the heat than heading down to the high street.

This got me thinking and I came across a piece of research from Springboard. It said that a longer-term improvement in footfall may be emerging, with there being signs that covered shopping centres (in other words out-of-town retail parks) are becoming less attractive destinations for shoppers.

So, a fall in online sales could be due to a reduction in click-and-collect orders, whereby people order online and collect at a retail park. It is less likely for people to collect on the high street as they are generally unable to park outside for free as they are at a retail park.

Therefore, the high street may actually be making a comeback and, in my opinion, an obvious way of taking advantage of this is through Marks & Spencer (LSE: MKS) (NASDAQOTH: MAKSY.US).

The main reasons for this are that it is very much focused on the high street, with the vast majority of its stores being located in town and city centres. Furthermore, it has not embraced the online revolution to quite the extent that you would imagine, with a new, slick website still a year or two away.

Then there is the fact that its shares trade on a price-to-earnings (P/E) ratio of 14.5, which compares well to the FTSE 100 whose P/E is 15 and to the consumer services industry group, whose P/E is 16.9. Meanwhile, a yield of 3.6% beats inflation, while earnings per share are forecast to grow by around 7% per annum over the next two years.

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> Peter owns shares in Marks & Spencer.

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