Marks & Spencer could add £1bn to earnings by 2014, according to a note issued by Goldman Sachs.

The broker turned positive on Marks & Spencer in anticipation of a new management strategy, which is expected to be unveiled mid-October.

“There is significant value to be unlocked within Marks & Spencer,” said the note. “We expect the plan will be ambitious in its aims and expansionary in its intent.”

Goldman said the ideal path for Marks & Spencer would be to close about 15% of its stores. It also said it hoped management would rein in international expansion, focusing instead on fixing the UK and lifting internet sales.

The broker said the supply chain can be modernised and management bonuses should be linked to shareholder returns.

Goldman said these five steps would support a share price in excess of 700p. M&S closed yesterday up 0.9% to 349p and Goldman added the stock to its “conviction buy” list with a 450p price target.

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