MARKS & Spencer is set to signal improving clothing trends this week when it updates investors on recent trading, although the division is still expected to have racked up its 15th consecutive quarter of falling sales.
Kate Calvert, retail analyst at Investec, said the group’s general merchandise arm – which encompasses clothing and homewares – will have benefited now that problems at its online distribution centre have been resolved.
We expect food to outperform a tough backdrop
Teething troubles at the site, in Castle Donington, Leicestershire, contributed to what chief executive Marc Bolland described as an “unsatisfactory” performance over the festive season, when customers complained that home deliveries, which normally take three to five days, were taking up to ten.
Calvert has forecast that like-for-like sales of general merchandise will be down by 0.4 per cent during the fourth quarter, though that would mark a significant improvement on the previous 13-week period, when takings slumped by 5.8 per cent.
She said: “We expect food to have outperformed a tough competitive backdrop and may have benefited from the recent underlying improvement in market conditions.”
Recent figures from research outfit Kantar Worldpanel show spending across the UK’s grocery sector grew by 1.1 per cent in the 12 weeks to 1 March, the fastest increase since June last year.
However, the continued struggles at M&S’s general merchandise unit have put Bolland under increasing pressure over the last year.
The retailer’s performance has stuttered despite turnaround efforts including a multi-billion pound investment drive, the hiring of new fashion executives and a marketing push featuring stars such as Rachel Khoo, Annie Lennox and Rita Ora.
Annual earnings have fallen for three years in a row and were recently overtaken by rival Next. However, City analysts expect underlying pre-tax profits at M&S to have risen to £641 million in its current financial year, which ends this month, up from £622.9m last time.
Helen Weir, former chief financial officer at rival John Lewis Partnership, is due to take up the same position at M&S on Wednesday. Before joining John Lewis, Weir was the boss of Lloyds Banking Group’s retail business and had been seen as a contender to take the top job at the state-backed lender.
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