Drop in food sales expected in M&S results

Marks & Spencer is expected to unveil another troubling set of annual figures this week.

City analysts forecast that like-for-like sales in food could have fallen as much as 1.1% last year, although consensus estimates put the figure as being down 0.2%.

If comparable food sales are negative in the fourth quarter it would represent a year of decline in the division at a time of rapid change in the sector.

The rise of Aldi and Lidl, Tesco’s takeover of Booker, and Sainsbury’s proposed merger with Asda have piled pressure on a sector grappling with falling consumer confidence and rising costs.

HSBC analyst Paul Rossington said: “We have previously argued that focus on convenience/food-to-go and a premium own-label offer afforded M&S a defensible point of differentiation.

“However, such has been the increase in price competition, and expected increase in competition on premium lines, that the M&S price premium now looks increasingly stretched.

“Self-inflicted execution mistakes have also undermined range and service.”

M&S previously described the food arm as exhibiting “ongoing under-performance”, with chief executive Steve Rowe saying he will slow expansion of the Simply Food chain as the group battles to restore its high street fortunes.

The retailer’s troubled clothing arm, which includes womenswear, is on course to see like-for-like sales fall by 1.1%.

Graham Spooner, an investment research analyst at the Share Centre, said: “The market will be focusing on the performance of the food business given the weak figures in the third-quarter statement in January.

“There have been some encouraging signs that the new management team on the clothing side is having some impact, but investors will be watching sales in particular.”

Wednesday’s results are also set to show that underlying pretax profit across the group fell 6% to £573 million.

Bottom-line profits are expected to rise substantially from £176.4m in 2017 to £458m, according to HSBC.