The Week Ahead: Figures due from Marks & Spencer and Sports Direct International
- Credit: PA
Brexit concerns will remain at the forefront this week, with retailers Marks & Spencer and Sports Direct International expected to give their views on the impact when they report figures.
Retail giant Marks & Spencer will be looked to for any signs of a Brexit hit on the high street when it updates on trading amid fears over plunging consumer confidence.
The retail bellwether’s shares were hit hard during the brutal two-day post-Brexit sell-off, falling by 22% as concerns mounted over the impact on the economy and consumer confidence.
It clawed back some of the ground lost as markets recovered, but investors remain worried over the outlook for UK retail in general and Thursday’s first quarter figures from M&S are expected to reveal further clothing sales woes, with new chief executive Steve Rowe having also warned that profits will be hit by turnaround efforts.
He said on unveiling full-year figures in May that there would be no quick fix in the battle to revive the company’s beleaguered general merchandise business, which saw sales drop 2.9% over the full-year.
M&S posted a 4.3% rise in underlying pre-tax profits to £689.6m for the 53 weeks to April 2 but Mr Rowe’s highly-anticipated strategy overhaul received a lukewarm response on the stock market. He pledged to cut everyday prices for nearly a third of its clothing ranges, while boosting staff numbers on the shop floor.
At the heart of his revamp is a plan to win back ‘’Mrs M&S’’ – its once loyal army of women shoppers aged 50 and over who he said have been ‘’neglected’’ in recent years – but Mr Rowe admitted it would take time to turn around clothing sales.
- 1 Revealed: The most popular Suffolk fish and chip shop
- 2 Suffolk woman stole thousands from football club and school
- 3 What time will the Red Arrows be flying over Suffolk this weekend?
- 4 London couple transform Suffolk home into an 'intimate' lifestyle retreat
- 5 Two motorbikes stolen after break-in at Suffolk home
- 6 Forbidden Suffolk: 5 more places you can’t visit in Suffolk
- 7 Former Town striker's front-to-back season could end in Wembley glory
- 8 Man claims supermarket fuel was contaminated as he reveals £200 repair bill
- 9 Inquest opened into human remains found by Suffolk river
- 10 Goat dies and ponies injured after dog attack
The first quarter figures are set to confirm the scale of the challenge, with analysts at Numis Securities expecting general merchandise sales declines to worsen, to a fall of 3% against 2.7% in the previous three months.
They said the first quarter will have been knocked by poor weather in April and June, clearance sales at BHS and tough comparisons from a year earlier. “We believe the long-standing issues in General Merchandise will prove difficult to solve,” they said.
Sports Direct will give more details on the hit from the record post-Brexit plunge in the pound when it posts annual figures on Thursday.
The results come after an eventful past few months for the group, which has been forced to warn over profits and seen its founder Mike Ashley appear in front of MPs to answer questions on the firm’s working practices.
Sports Direct also added to the raft of firms alerting over the impact of Brexit when it warned the pound’s plunge against the dollar would take its toll on product buying.
It said it was not hedged against currency movements for the year ahead in an ominous sign for the new financial year.
But it was Mr Ashley’s rare turn in the limelight that saw Sports Direct dominate the headlines last month when the Newcastle United FC owner admitted he paid workers below the minimum wage, also telling MPs that he has discovered ‘’issues’’ with working practices at the retailer as part of an internal review.
Mr Ashley told MPs from the Business Select Committee that HM Revenue & Customs is also probing the firm over wages and that Sports Direct is in talks to offer back pay to staff.
The tycoon pledged to implement a number of changes to working practices within 90 days, promising to write to MPs if the timeframe neededto be extended.
He also raised eyebrows in Marchthis year after making a startling admission in a newspaper interview that the group was “in trouble”, forcing it to send out an alert warning that profits were expected at or around the bottom end of expectations.
This came after it had already trimmed profit forecasts to between £380m and £420m in January, against £383.2m the previous year. This will mark a sharp slowdown in profits growth, having previously notched up a 15.7% surge in annual underlying earnings.
Sports Direct, which runs around 400 stores across the UK, was knocked by poor Christmas trading amid unusually warm weather and Mr Ashley since claimed negative publicity caused by MPs has impacted trading further.