MARKS & Spencer (M&S) is set to report an eighth consecutive quarterly fall in clothing sales next week, ratcheting up pressure on management to deliver a swift turnaround when new season ranges start hitting the shops later this month.
The UK’s biggest clothing retailer will publish first-quarter sales on the same day it hosts an annual shareholder meeting that could see chief executive Marc Bolland under fire from investors angered by two years of falling profit.
The group is forecast to report a drop in sales of clothing, footwear and homewares of up to 3 per cent at shops open more than a year in the 13 weeks to 29 June, according to a company poll of ten analysts.
The average forecast for a fall of 1.5 per cent compares with a 3.8 per cent decline in the fourth quarter of the group’s 2012-13 financial year.
Bolland, chief executive since 2010, is spending £2.3 billion over three year as he seeks to make the company an international multi-channel retailer.
He is pinning his hopes on a new clothing strategy based on more stylish and higher-quality garments.
Autumn/winter ranges were unveiled in May, receiving generally positive reviews from both analysts and the fashion press, and sending shares, which have also been buoyed by periodic bouts of bid speculation, to a five-year high.
Sales data for the first quarter will have been impacted by continued pressure on consumers’ disposable incomes and poor weather.
Some investors, such as Standard Life, have said there could be pressure for management change if the new autumn ranges do not set the tills ringing. They will want to see signs of a pick-up when M&S updates on second-quarter sales in November, while a much improved Christmas trading performance is imperative for Bolland.
M&S’s food business, which contributes more than half of group sales, is performing much better, with analysts forecasting first quarter like-for-like sales up 1 per cent to 2 per cent – with a consensus of up 1.6 per cent – after a rise of 4 per cent in the previous quarter.
Analysts are currently on average forecasting M&S will make a pre-tax profit for fiscal 2013-14 of £675 million, only slightly up from the £665m made in 2012-13.
Bolland may also face criticism over his pay package at the shareholder meeting, being held at London’s Wembley Stadium. However, the Local Authority Pension Fund Forum (LAPFF), which was critical of M&S’s management at the 2009 meeting, said it planned to back the board.