M&S surprise despite Xmas online boom

ONLINE retailers are expected to come out top this week as Britain’s biggest brands reveal whether Christmas trading was a fiesta or a flop.

The week which spells out 2016’s winners and losers is expected to reveal the gap between online and the High Street has continued to widen.

But a surprise success is expected to come from Marks & Spencer, which analysts predict is going to shrug off bleak warnings from Next and eke out a longawaited recovery in its clothing arm.

Asos and Boohoo will add 30pc and 40pc to last year’s sales as shoppers choose to browse at home instead of venturing out.

This has been driven by greater confidence in deliveries arriving in time for Christmas, helping British High Streets suffer their quietest December since records began in 1998, according to Ipsos Retail.

Online-only sellers face fewer overhead costs and are able to respond faster to ever-changing fashion trends.

These fears were further stoked last week after Next revealed a gloomy set of sales figures and warned over profits – which sent shares of its rivals tumbling.

However the picture will be mixed across clothing and food retail, with Tesco and Morrisons expected to be this season’s biggest triumphs over rivals including Sainsburys.

And retail bellwether M&S is expected to post a 0.2pc rise in third-quarter sales across its general merchandise business when it reports on Thursday.

This would mark its first sales growth since early 2015 and would be a welcome boost for chief executive Steve Rowe who is driving a closelywatched turnaround strategy.

Rowe, 49, announced in November plans to close 30 UK stores and convert 45 more into food-only shops, while withdrawing from some international markets. It came after M&S revealed profits had tumbled 88.4pc to £25.1m in the six months to October 1. Andrew Wade, retail analyst at Numis Securities, said: ‘M&S performed so poorly in clothing and homewares through the third quarter last year, we see a good possibility that the division reports a small positive likefor-like outcome this time.’

It could be a mixed picture for its High Street peer Debenhams which is likely to have found trading tough as demand for clothing falls and costs rise. The department store chain is making steps to move away from fashion – ousting some of its older designers – but is yet to make significant inroads in more lucrative areas such as beauty.

It stands to lose out if M&S stages a major recovery.

Elsewhere Primark owner Associated British Foods is predicted to post a 2pc rise in sales as shoppers opt for cheaper knitwear – piling further pressure on squeezed middle retailers.

Richard Lim, chief executive at Retail Economics, said: ‘There are always winners and losers in the retail sector and especially within clothes retail.’

He said the victors would be the ones which allowed customers to shop in a variety of ways, including online, in-store, using a mobile phone and apps.

‘Most of the growth through online is coming through click and collect which offers convenience for customers,’ he added.