M&S shares hit by Christmas trading concerns

Shares in British retailer Marks & Spencer continued their poor recent run on concerns about Christmas trading, with one broker forecasting a 5.5 per cent slump in non-food underlying sales over the festive quarter.

M&S chief executive Marc Bolland Photo: Adrian Brooks/M&S/PA Wire

Nomura analyst Fraser Ramzan, who has a strong track record in forecasting M&S’s performance, predicted a 5.5 per c ent decline in general merchandise sales at stores open more than a year over the 13 weeks to December 26, M&S’s fiscal third quarter. That would compare with a second-quarter decline of 1.9 per cent. Mr Ramzan also cut his pre-tax profit forecast for M&S’s full 2015/16 financial year by 5 per cent and his target price to 565 pence from 600 pence, maintaining his “neutral” recommendation.

His third-quarter sales forecast for general merchandise, which consists of clothing, footwear and homewares, is the most bearish published so far and takes into account recent market share data compiled by Kantar Worldpanel and an assessment of the impact of Britain’s mild winter on fashion sales.

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M&S has polled 11 analysts and their forecasts range from flat to down 5.5 percent, including the Nomura forecast, with a consensus of down 2 percent.

A spokeswoman for M&S declined to comment on the Nomura forecast.

M&S chief executive Marc Bolland’s non-food strategy has focused on growing gross margins, mainly through better sourcing, rather than chasing unprofitable sales.