He also challenged whether the VAT cut was passed on, or whether it was actually being used to prop up their margins…there was no clear denial/ answer, in fact, evasive was the most accurate response.

M&S said no change in guidance, but like George Burley (Scotland Manager), this looks like another case of a ‘dead man walking…Sell into the strength

At this stage we are not sure to what extent figures reported benefit from the strength of post Christmas Clearance activity (quarter this year started on day 2 of the Sale last year on day 4) nor how the run rates look over the latter part of the period. Given that there has been no further deterioration of guidance on the gross margin or costs for 2008/09E we would expect market consensus estimates to rise on these figures maybe by low single digit percentages albeit the CFO is reported on Reuters as being comfortable with existing consensus estimates.

to focus on the upside post recession, rather than worry about the short term

effects of the economy upon profits. We continue to expect the shares to

outperform.

4.8%, compared with a fall of 8.9% in Q3 and continued the improving trend in food,

which were 3.7% lower versus a fall of 5.2% in Q3. Adjusting for the late timing of

Easter adds 0.7% to these numbers, which makes the reported numbers a lot better than consensus.

In terms of product category, market share was ‘maintained’ in Clothing over the full

year and progress was made in Home. The introduction of Portfolio in February has

been well received by customers. Market share in Kids is at its highest level by both value and volume for seven years. In Food, the improving performance was driven by

increased innovation, better ranging and sharper pricing. Availability improvements also helped.

Management reduced its gross margin guidance for the year in Q3 (from -100 basis

points to -175 basis points) and has today gone to the extreme of the range, but we

would not overly concern ourselves with this, given that it admitted to the risk being on the downside in January. The big news in Q3 was on cost savings for next year. M&S forecast an underlying reduction in its UK cost base of between £175m and £200m. This will provide a decent buffer for 2009/10.

sales trends across both divisions, and unchanged gross margin and cost

guidance, should begin to improve the group’s earnings visibility, despite

growing input cost pressures, and start the process of rebuilding investor

confidence in M&S. However, at this early stage, March 2010 earnings are

likely to continue to assume LFL sales trends more in line with 3Q than today’s

better 4Q performance.

we expect consensus March 2009 PBT to increase c.3% to c.£610m.

v We have a Hold rating on the shares — Our view that sector-wide revenue

trends should improve in 2010 (as real household cashflow moves back

towards zero), in combination with today’s improved M&S trading patterns,

offers the potential of material earnings upside in 2009/10. This prospect

should continue to support the shares.

Full year gross margin guidance basically unchanged at -175bps, opex growth reaffirmed at +4-5%, capex no more than £700m.

International sales +23%.

- We are unlikely to change our FY09E PBT estimate of £600m/EPS: 27.1p (consensus per Reuters is also £600m), though given the better than expected Q4 sales performance the risk here could be to the upside. Similarly we would not look to raise our FY10E PBT estimate (£485m/EPS: 21.9p) at this stage, though we believe M&S has planned for a rather worse trading experience than seen in the latest quarter.

- Sentiment towards M&S on the sell-side is already extremely bearish so the Q4 sales outturn could wrong-foot the market. Moreover in FY10 the business should be in much better control of its P&L via lower opex and more realistic stock commitments, in contrast to FY09 when, frankly, profits have been in freefall. Hence if, as it now appears, M&S can break the downgrade cycle, we doubt the shares will underperform the sector even after the strong progress registered so far in 2009. Meanwhile all of the FTSE100 general retailers have now reported without triggering further FY10 forecast reductions, and we would see this announcement as a positive catalyst for the sector.

We think the time has come to reduce exposure to European (especially UK) retailers. Having been bullish on the space, we think performance and valuation now seem to be up with events and there are now better opportunities elsewhere.
In particular, we are adding significantly to our real estate exposure. The sector has lagged badly this year as investors have fought shy of capital raisings, but we believe valuations look very attractive on a number of metrics and think the bulk of the capital raisings are now behind us.
Recent data suggest that optimism surrounding the resilience of the (UK) consumer is shifting to the housing market, with UK mortgage approval data surprising on the upside last week as UK retail sales disappointed the consensus.
Accordingly, we would also advocate switching retail exposure to the building and construction sector. While this sector has not trailed by as much as real estate, it has not participated to the same extent as retail in this policy-induced recovery rally.
At the stock level, we remove Marks and Spencer and Carnival from our European Recommended Portfolio, while we add Hammerson. We already own Land Securities, CRH and Holcim.

And that’s fantastic because Stan Kroenke is a smart billionaire who will reduce Wenger’s power in a way which benefits the club. To keep his job, Wenger will have to sign more Arshavins, not so many Songs and Meridas.

Monday’s sale of 8% by Danny Fiszman shows us that that Danny is no longer an obstacle to Stan’s ownership of the club.

Danny has told us his price £8,500. And Stan has told us his price : £8,500.

Stan will not pay more than £8,500 for a share because that is what he thinks Arsenal shares are worth.Spending £42.5 million is a big decision by Stan. He thinks AFC has a future. The way he does business is very sure-footed and strategic. And he paid cash. He didn’t borrow the £42.5 million. He paid cash, so keep that in mind for future reference.

Before Monday :
25.0% Usmanov
24.2% Fiszman
15.9% Lady Nina
12.4% Kroenke

Now:
25.0% Usmanov
20.5% Kroenke
16.1% Fiszman
15.9% Lady Nina

None of the big shareholders can now buy Lady Nina’s shares without having to launch a full bid, as they would exceed the 29.9% threshold.

Lady Nina has been shafted. She has been comprehensively shafted by Danny, who has engineered her exit and made sure Stan buys his shares, not hers. Lady Nina told the Evening Standard: “It comes as a complete surprise to me. I haven’t spoken to the other shareholders today. I don’t know what it means for the future of the club.”

The exchange rate has worked for the American. Stan bought at $1.40 to the pound, rather than the $1.85 he previously had to pay, so his outlay is reduced.

Danny had exactly 15,000 shares. He has now sold 5,000 and he has 10,025 left. So it appears he has bought some shares recently without declaring them to the market.

The best long-term owner for Arsenal FC is Stan Kroenke. I’ve said that on ANR for two years and I was right. He may only have 20% but it’s his club now.

The Q&A with Ivan Gazidis confirms that. Yes, Stan wants continuity in the traditions of the club. Has there been any contact with Lady Nina since she left the board? It’s important that we have open dialogue with her. I’ll be reaching out to her.(But she didn’t want you as CEO, Ivan !) Will she sell to the current board? I’m sure there would be interest from among the current board.( i.e. my boss, Stan.)

Naturally, they deny that the installation of Ivan was a pre-condition of Stan joining the board and of course Ivan did not start work until January 1st , long after the AGM where Stan was presented to shareholders.

In the future, keep in mind that Stan has never paid more than £8,000/£8,500 for his Arsenal shares. Secondly, he has never sold a share in any of his sports franchises. Silent Stanley of St Louis never talks, never signals his intentions, never goes yak-yak to the media like Tom Hicks. He accumulates and waits and always negotiates from a position of strength. Crucially, he accumulates at the right price. What Stan Kroenke has done in the past, he will do again. That’s all you know about Stan and all you need to know.

Oddly, Danny did not turn up at the last AGM to welcome his new American board member. There is no photo of Danny shaking hands with Stan. Millionaires don’t like billionaires because they love to be the richest man in the room.

The big irony is that it was David Dein who introduced Stan Kroenke to the club. Dein wanted Stan to buy the Arsenal. Now that is happening without his participation. And it’s happening two years after his sacking in April 2007.

The Company announced on 18 March 2009 that it was considering, among other options, the possibility of an equity capital raising. The Company confirms that it continues to pursue an equity capital raising. However, no assurance can be given that an equity raising will proceed. A further announcement will be made shortly.

In an RNS, BARC has confirmed that it won’t be participating in the UK government’s asset protection scheme; it has also confirmed that its capital and reserves were expected to meet the capital requirements of a detailed FSA stress test that determined resilience to stressed credit risk, market risk and economic conditions. The trading performance of the Group remains strong, and there are a number of parties interested in iShares (with the press reporting three private equity bidders, largely funded by a loan from BARC).

And although a disposal of iShares – a business with relatively stable, strong profitability and low capital intensity – would provide a capital boost, it would also dilute the remaining Group’s returns on invested capital, in our view.

This would also raise questions about earnings sustainability, because the Group would become even more dependent on BarCap’s earnings. And although BarCap reported extremely strong performance in Jan and Feb (along with almost all of its investment banking/derivatives trading peers), we question how much of that performance was driven by favourable counterparty payouts by AIG, monolines and credit derivatives product companies (there is an interesting post on the Zerohedge website that looks at AIG payouts in particular).

NH: We detail disclosure on monoline exposure from those banks in Europe with
meaningful positions. We note the ‘moveable feast’ nature of the size, it being
driven by the mark-down on the underlying CDO/CLO as well as the level of
credit valuation adjustment. The table shows notional exposure on the left, then
the current fair value of that exposure. The difference between the two is the
gross claim on the insurer. Banks have then taken a Credit Valuation
Adjustment (CVA) for the risk of the claim not being paid in full; some also
have hedges. On the right is where the net claim on the monoline is currently
held on the banks’ balance sheets.

Zero Hedge is rarely speechless, but after receiving this email from a correlation desk trader, we simply had to hold a moment of silence for the phenomenal scam that continues unabated in the financial markets, and now has the full oversight and blessing of the U.S. government, which in turns keeps on duping U.S. taxpayers into believing everything is good.

I present the insider perspective of trader Lou (who wishes to remain anonymous) in its entirety:

“AIG-FP accumulated thousands of trades over the years, all essentially consisted of selling default protection. This was done via a number of structures with really only one criteria – rated at least AA- (if it fit these criteria all OK – as far as I could tell credit assessment was completely outsourced to the rating agencies).

Credit linked notes are done through single-name CDS desks and a cash desk (for the note collateral) and the portfolio swaps are done through the correlation desk. These trades were done is almost every jurisdiction – wherever AIG had an office they had IB salespeople covering them.

Correlation desks just back their risk out via the single names desks – the correlation desk manages the delta/gamma according to their correlation model. So correlation desks carry model risk but very little market risk.

I was mostly involved in the corporate synthetic CDO side.

• Police break up fight after late-night Westminster debate
• One man – thought to be a journalist – arrested

An argument that appears to have started at a Conservative party reception spilt over into a neighbouring part of the Palace of Westminster. One man – thought to be a journalist – was arrested in the fracas in which a police officer received minor injuries.

Commons authorities said the incident was not terrorist-related, nor connected to the G20 meeting this week, but the exact details of what happened in the corridors of power remained sketchy.

A Conservative source suggested that three journalists who had earlier been to the gathering hosted by party chairman Eric Pickles in the shadow cabinet room were at first involved in the trouble, which ended in a corridor behind the Speaker’s chair in the Commons, just yards from where MPs were debating Africa. It is thought senior ministers’ offices are also nearby.

The Press Association news agency said it understood that party officials had been escorting guests without Westminster security passes who are not allowed into restricted areas of parliament to and from exits during the reception.

But those involved in the incident are believed to have slipped away where the police became involved.

The Commons authorities said there had been an argument between two non-passholder guests who left the party to continue their argument in a private area of the House of Commons where they were stopped.

Sittings in the Commons and the House of Lords were not affected.

A Conservative source said: “We understand that three journalists who earlier in the evening had been at Eric Pickles’ party left and at some point later on created some kind of disturbance. There was nothing in their behaviour earlier that suggested they would act like this.”