The ratings on Marks&Spencer PLC (M&S) are supported by its position as the U.K.'s largest clothing retailer, as well as its established presence in the U.K. food retail market that benefits from the nondiscretionary nature of food spending. In addition, the M&S brand benefits from its image as a quasi-national institution with an emphasis on high quality and product innovation. These strengths are partially offset by the intense price competition prevalent in the U.K.'s fragmented apparel retail market. Further risks associated with the apparel market are the possibility of unsuccessful product ranges due to ever-changing fashion trends and the discretionary nature of apparel purchases. These factors, together with seasonality, expose the sector to volatility in sales and earnings.
