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At 362p, the shares are close to their recent high of 388p, which coincidentally was exactly double their low of 194p, which they hit just under a year ago. The reason for this joy is a rather healthy set of figures for the past six months' trading:
Admittedly we're not seeing any significant growth here, and in fact like-for-like sales were slightly down, but considering what the economy has been through over the past year that is not a bad result. Swings and roundabouts While Marks & Spencer loses from customers trading down to cheaper alternatives -- whether that be mainstream retailers like Tesco (LSE: TSCO.L - news) (LSE: TSCO) and Sainsbury (LSE: SBRY.L - news) (LSE: SBRY), or discount brands such as Aldi and Lidl -- it also gains from people choosing to spend the night at home with a 'Dine in for two for £10' promotion or a 'Pizza Meal Deal'. The company has been around for 125 years, but under Chairman Sir Stuart Rose it is clearly not afraid to embrace change. Many of the smaller stores have been closed over the past year, while the business has expanded abroad. Even the dividend, which was an important factor for many of the company's shareholders, has been cut by one-third. Marmite and Tabasco Symbolically, one the biggest changes has been the announcement that the stores will carry branded goods rather than just the M&S brands. This makes a lot of sense, because every time a customer has to go elsewhere to get his fix of Marmite or Tabasco Sauce, the business loses a shopper. By stocking 400 of the country's favourite brands in addition to its in-house fare, it looks likely that Marks can only benefit. A wild-card in all of this is the state of the company's pension liabilities. Over the past half year the pension fund has benefited from the recovery in asset prices, but this has been more than outweighed by the burden of low interest rates, which increases the actuarial cost of funding pensions. The net effect was to push the deficit up from £152m to £521m, an increase greater than the company's pre-tax profit over the same period. Analysts will be watching closely how that situation develops. As far as trading is concerned, Sir Stuart was predictably cautious: "We have had a good start to the third quarter. However, the market remains competitive and, as we come up against volatile trading conditions last year, we remain cautious about the outlook for Christmas and the year ahead." And I don't think he's just managing expectations. Looking longer term, the IMF warned on Tuesday that the developed world is facing a decade of spending cuts and tax increases, so it may be a bumpy road ahead. 
Copyright © 2008 Fool.co.uk - Investment Team. All rights reserved.
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