M&S' like-for-like sales to benefit from BHS' collapse - Morgan Stanley Research

It expected BHS' collapse -- with the loss of up to 11,000 jobs and closure of 163 stores -- to ease the pressure on that of its retail-sector rivals.

"We expect M&S to be the biggest beneficiary," wrote Morgan Stanley Research in a research note, which rated the stock as "Overweight" and placed a 460p target price on it.

"While it is unlikely to change M&S' longer-term prospects, it increases our conviction that the nearer-term risk reward is now very favourable," it said.

The research note contended that 60% of BHS' stores were within 200 metres of an M&S store, and that there was considerable overlap within both the product ranges and consumer bases.

"In the year to August 2014, BHS reported UK sales of £615m. We believe that the freeing up of these sales represents the single biggest change to the UK competitive landscape for clothing since C&A exited the UK market back in 2000, the note said.

"We think it realistic to expect M&S to capture 10-20% of the sales that BHS is likely to cede," Morgan Stanley Research wrote.

Nevertheless, it argued that the BHS closing-down sale was likely to dent M&S in its first quarter and potentially marginally so in the second, too.

Thereafter, the research note said BHS' closure would add 1.7-3.2% to M&S's Clothing & Home sales growth for a year.

"With M&S having recently issued very cautious guidance for FY 2016/17 and facing a particularly soft 'comp' in FY Q3, we think trading momentum could improve materially later this year."

The joint Work & Pensions and Business select committee inquiry today heard evidence from a posse of BHS executives, with several issuing strong accusations against others.