MARKS & Spencer is expected to post another fall in clothing sales next week, as chief executive Mark Bolland attempts to convince the City that his recovery plan is on track.
The forecast decline in like-for-like sales of 1.5 per cent for the 13 weeks to the end of June follows a disastrous 2012/13 for general merchandise, when underlying sales were down 4.1 per cent, and offset much better trading in its food halls.
M&S’s autumn/winter range however has already received good reviews following the appointment of a new fashion team.
Mr Bolland, who recently said that better returns for investors in the next year were “no fairytale”, faces shareholders at the firm’s annual general meeting at Wembley Stadium on Tuesday, just hours after the update is published.
Despite a fall in last year’s profits to £665m, there are signs that the City is prepared to give Mr Bolland more time with his turnaround plan.
Analysts expect pre-tax profits for the current year to rise to around £675m, while retail analyst Jean Roche of Panmure Gordon predicts a much higher figure of £703.3m, citing factors such as the strong food division and potential for an upturn in general merchandise.
The profits figure is still a far cry from Marks’s pre-recession heyday, when it made £1bn. Next week’s figures should show Marks & Spencer’s overall performance balanced out by the continued success of its food division, which is expected to see a like-for-like sales rise of 1.6 per cent
M&S has repeatedly said it will take time for the action it has taken to reverse the decline in clothing sales.
An executive makeover has seen a new head of general merchandise, John Dixon, brought over from the successful food division, while Belinda Earl, the former Jaeger and Debenhams boss, has become style director. Mr Bolland will be hoping it is enough to prove that he has stemmed the flow of shoppers deserting the high street giant, whose much-criticised womenswear division is seen as key to its fortunes.
UBS analyst Andrew Hughes added: “Although the non-food turnaround is taking longer than expected – and not helped by poor weather and higher promotional activity – we believe that the strategic direction is right and will start to pay dividends over the next 12 months.
“There are particular opportunities in more exciting and better quality product, improved availability and lower markdowns. These issues have been fixed in food over the last few years and we would back general merchandise management to repeat the trick.”