RETAIL bellwether Marks & Spencer’s gamble on targeting younger shoppers may prove costly when it posts festive trading figures this week.
Investors say chief executive Marc Bolland faces a “credibility gap” if sales of the crucial autumn and winter range are down significantly.
He has been criticised for aiming the clothing range at women aged around 40 and under when the company’s core customer is in the 55-plus age group.
Analysts expect the figures for womenswear to be down but say Bolland should survive unless they collapse.
Bolland took over from Sir Stuart Rose in the summer of 2010 and has been under pressure since then to turn round the business. Analysts say he has not been helped by strong Christmas trading updates from the likes of department store groups John Lewis and House of Fraser, and fashion retailer Next.
Their figures contrasted starkly with department store group Debenhams, which put out a profits warning last week after poor festive trading.
One analyst said: “The spotlight is squarely on Marks & Spencer and Marc Bolland. Will M&S come through like John Lewis and Next or be like Debenhams? M&S sits in roughly the same part of the middle market as them, with arguably a better product mix than Debenhams.
“Bolland’s problem is that the Christmas retail success stories have shown that it is all still there for those who have the right product and systems in place.
“Above all, this is the crucial period for how well M&S’s latest autumn womenswear collection has sold. It got a good trade press on initial view but this is the real litmus test.
“Personally, I think Bolland will survive unless the figures are a complete disaster. Even so, I think M&S’s like-for-like general merchandise sales (dominated by clothing) will be off 1, perhaps 2 per cent.
“That might cause a bit more of a credibility gap for management, but I don’t think it would be terminal at this stage.”
M&S, which on Thursday reports its trading for the 13 weeks to 28 December, is likely to see a strong performance from its food operation, mirroring recent quarters when the division’s like-for-like sales have been positive.
Rahul Sharma, retail analyst at Neev Capital, said: “The difficulty for the chief executive is that he has been there quite a long time now and the numbers have not really improved.
“I think food will continue to have been resilient for the group, as it traditionally does well over Christmas. But clothing is the key, and if Bolland then tries to throw it all ahead to the coming spring collection it may lead some to say ‘wake up and smell the coffee’.”
Some critics claim M&S’s latest female clothing collection is primarily aimed at females aged between 35 and their early 40s when two-thirds of its customers are over 55. “It is obviously a gamble,” one said.
There has been strong evidence over Christmas of price discounting.
Keith Bowman, retail analyst at Hargreaves Lansdown, said: “Promotional activity, particularly for M&S’s currently pressured general merchandise business, continues to cast a shadow over analysts’ forecasts for full-year profits.
“Management’s relatively late push to capture online sales, combined with its struggle to attract younger consumers, also provides concern.
“Analysts predict full-year pre-tax profit in the region of £655 million, down around 1.5 per cent on last year.”