Fears of sales slide at M&S
THE warm winter weather, floods and terrorism are likely to figure among the excuses wheeled out by Marks & Spencer to explain a dire festive update.
City experts fear Britain’s biggest clothing retailer will report a decline of as much as 5.5pc over the third quarter in ‘general merchandise’ sales – the category that includes womenswear and men’s fashions.
The poor performance will be a bitter blow to chief executive Marc Bolland, who is under pressure to kick start growth in fashion sales. Failure to restore the company to its former position as the favourite of middle class customers has dogged his five-year tenure.
The latest disappointing figures will come on the back of an equally bad performance last year. Despite enjoying some success with its lingerie range by model Rosie Huntington-Whiteley (pictured), problems with a new distribution centre caused a 5.8pc fall in sales.
Analysts had hoped for an improvement this year, but a long list of Britain’s retailers have struggled to shift winter woollies that have stayed on the shelves due to the mild weather.
Most will look to rival Next, which is considered the best-run retail chain in Britain, for context on just how bad market conditions really were. It will report its figures on Tuesday. Next has a reputation for starting its sales after Christmas in order to protect full-price revenues.
Rivals H&M, Gap and Jack Wills began their discounts early and may have managed to dent sales at Next.
Analysts at Jefferies cut their fourthquarter sales growth for the group to 4pc compared to a year ago from earlier estimates of 7.6pc.
Jefferies said: ‘Next typically fares better in this regard and has navigated the seemingly constant bouts of highly unseasonal weather over the past five years better than most.’
In October the group edged up its fullyear guidance to between £810m and £845m, from an earlier range of between £805m and £845m.
If Next has also had a tough Christmas it will ease some of the burden on Bolland.
Nomura is forecasting a 5.5pc fall in third quarter general merchandise sales at M&S while Jefferies is predicting a drop of 3pc.
However food, which accounts for more than half of annual profit, is expected to have performed well, with an increase of 0.3pc over the quarter.
Bolland is set to blame a perfect storm of events for the fall in clothing sales, including the floods and bomb scares at shopping centres.
Andrew Hughes, an analyst at investment bank UBS, said that if M&S is unable to deliver positive clothing sales against last year’s poor figures then ‘it is hard to see when this will be the case.’