M&S collars fresh criticism in weak showing on clothes

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MARC Bolland’s strategy for reviving clothing sales at Marks & Spencer will come under fresh scrutiny when the company issues a trading update this week.

Poor sales of clothing will heap more pressure on the high street bellwether after its dismal Christmas trading period in general merchandise.

The retailer, which updates on trading for the three months to the end of March on Thursday, has seen clothing sales squeezed by heavy discounting and weak consumer sentiment.

Analysts expect the prolonged cold spell to have added to the woes of one of Britain’s biggest clothing retailers, by hitting sales of its spring-summer range.

A consensus of 11 analysts expect underlying general merchandise sales to slide by 4.5 per cent in the fourth quarter – with some expecting a six per cent fall.

The group has drafted in the former Debenhams and Jaeger boss Belinda Earl to revitalise its womenswear range, but in January admitted it needs more time to formulate its turnaround plan.

General merchandise sales at the retail giant were down 3.8 per cent in the 13 weeks to December 29, pushing overall like-for-like UK sales down 1.8 per cent. That was a performance labelled “not yet satisfactory” by Mr Bolland, the former chief executive at Bradford-based Morrisons.

Analysts at Shore Capital said M&S is likely to have endured a “horrible” fourth quarter in general merchandise.

Clive Black said: “M&S ladieswear has been haemorrhaging market share for some time now and the fourth quarter update could make for pretty challenging reading for investors.”

He added: “At the same time, we see a retailer that is seeking to self-improve through the creation of a more effective infrastructure, a more competitive e-commerce proposition, sensible but incremental internationalisation and more than sound progress in 
the substantial UK food operation.

“Critical to the ongoing performance of M&S’s shares though, in our view, is the absolute and relative output of its core ladieswear ranges in the UK. In this respect we have been disappointed by recent momentum and remain concerned about near-term prospects.”

The City expects like-for-like food sales to grow three per cent between January and March, with overall group profits set to be around £660m later this spring.

Despite its lacklustre performance, M&S’s shares have risen about 12 per cent on the FTSE 100 over the past year, lifted by speculation over a possible £8bn bid from the Qatar Investment Authority, plus general stock market exuberance.

Mr Black said many British shoppers still have affection for the brand, which was established in Leeds, and warned the retailer to stop letting them down in an increasingly competitive environment.