M&S to reveal boost to clothing arm helped by heatwave and late Easter
- Credit: PA
Marks and Spencer is set to reveal an improvement in its under-pressure clothing arm next week after the recent heatwave and late Easter helped it narrow recent sales falls.
The retail bellwether reported a sobering set of annual results in May showing clothing and home sales plunged back into reverse in its fourth quarter, tumbling by 5.9%.
Experts are expecting the clothing and home sales fall to pare back to around 1.3% in the group’s first quarter, which will include Easter this year and comes up against weaker trading from a year earlier.
Food sales, which tumbled by 2.1% in the previous quarter, will rebound by 0.6% thanks to warmer weather and rising inflation, according to analysts.
But with rivals such as Debenhams sounding the alarm over the squeeze from Brexit-fuelled inflation, the path to sales recovery is not expected to be smooth for M&S.
Analyst forecasts also range widely, with conflicting reports from high street players in recent days.
Jefferies experts believe comparable clothing and sales may have fallen by 1.5% against a declining market.
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But Numis analyst Andrew Wade predicts Tuesday’s update will show clothing and home sales rising by 1.5% in a “solid-looking” first quarter.
Despite pencilling in a better quarter for M&S, Mr Wade cautioned the bounce back may only be short-lived.
“While the combination of soft comps and calendar effects should result in a solid-looking first quarter result, we retain our negative stance, believing that M&S’s clothing and home division will prove more difficult and costly to turn around than expected,” he said.
M&S posted a 64% plunge in annual profits to £176.4 million in May, admitting its overhaul had “come with a cost”.
As well as the Easter timing, its move to axe promotions in favour of everyday low prices hit sales
But chief executive Steve Rowe said the group has stabilised its market share in clothing since the start of 2017, while action to cut clearance promotions has helped full-price sales surge by 11% in the second half of its financial year.