Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Warm weather set to push M&S non-food sales down again

Published 31/10/2014, 12:07
Updated 31/10/2014, 12:07
Warm weather set to push M&S non-food sales down again

Warm weather set to push M&S non-food sales down again

By James Davey and Neil Maidment

LONDON (Reuters) - Marks & Spencer (L:MKS) is set to report a 13th straight quarterly fall in underlying non-food sales, with trading hurt by Britain's warm autumnal weather, the continuing "settling in" of a new website and a sluggish economic recovery.

Marc Bolland, M&S CEO since 2010, has spent over 2.3 billion pounds to address decades of under-investment, overseeing the redesign of products and stores. But a new clothing team he set up in 2012 has so far failed to deliver a sustained increase in sales and, for the first time, M&S earned less in the year to the end of March than faster-growing rival Next.

The retailer publishes second-quarter sales figures on Wednesday and is expected to report a fall in sales of general merchandise - clothing, footwear and homewares - of 3.7 percent from shops open over a year, according to a consensus of analysts' forecasts provided by the company.

That compares with a first-quarter decline of 1.5 percent.

The 130-year-old firm - Britain's No.1 clothing retailer by sales - also reports first-half results which are expected to show a 3.7 percent fall in pretax profit to 252 million pounds ($403 million), down for a fourth straight year.

M&S is expected to say the results for the 13 weeks to Sept. 27, its fiscal second quarter, reflected Britain's mild autumn - not helpful for shifting high-margin winter coats, knitwear and boots.

Official data published on Oct. 23 also showed British retail sales fell more than expected in September, the most important month in M&S's second quarter. The data added to signs the country's economic recovery is losing some of its pace.

On Wednesday the warm weather forced Britain's No.2 clothing retailer Next (L:NXT) to cut its full-year profit guidance, as it forecasted slowing sales of winter wares would continue into its final Christmas quarter, with fashion firm SuperGroup (L:SGP) following suit on Friday.

WEBSITE

M&S management has also indicated that online sales were likely to remain under pressure in the second quarter, after a fall in the previous quarter.

The new M&S.com, launched in February, is a pillar of the firm's planned transformation into an international retailer reaching customers through stores, the web and mobile devices. The relaunch brought more video and magazine-style content, but some shoppers found it hard to register on the site.

In May the company warned the site would take up to six months to "settle in".

M&S has said its trading strategy is to focus on gross margin, rather than chase unprofitable sales. It has guided to a full-year increase in non-food gross margin of 100 basis points.

M&S's food business - which contributes over half of group sales and about a third of profit - is performing better than clothing, with analysts on average forecasting second-quarter like-for-like sales up 0.2 percent.

That would compare with first-quarter growth of 1.7 percent, or 0.1 percent adjusting for the impact of a later Easter.

The food business is outperforming a grocery industry growing at its slowest pace for 20 years, benefiting from product innovation and a focus on providing for special occasions.

M&S has guided to a full-year rise in food gross margins of 10 to 30 basis points.

Shares in M&S, down 19 percent over the last year, were up 0.4 percent at 406.6 pence on Friday at 0952 am London time, valuing the business at 6.6 billion pounds.

© Reuters. Marks & Spencer signs are seen outside outside a store in London

(1 US dollar = 0.6256 British pound)

(Editing by Pravin Char)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.