Proactive Investors - Run By Investors For Investors

Don’t expect much festive cheer in M&S’s Christmas trading update

Clothes sales have long been poor but a recent slowdown in the previously resilient food division has spooked investors
M&S store
M&S shares are down more than 10% over the past couple of months

Like most of the retail mob, there is likely to have been little festive cheer for Marks & Spencer Group PLC (LON:MKS) over the all-important Christmas period.

The retailer has long been struggling with flogging its clothes, which are aimed at the older generation not known for regularly revamping their wardrobe.

READ: RBS downgrades M&S on challenging outlook for food business

M&S has tried to change that image by bringing on Holly Willoughby as one of its brand ambassadors, and its association with Gareth Southgate and the England football team didn’t do it any harm in the summer.

But sales have still been sluggish: UBS is forecasting a 1.5% drop in like-for-like clothing and home sales in the third quarter and its analysts think the Black Friday effect will likely have dented margins, too.

More worrying for M&S is that those issues seem to have spread to the food division, which had previously proved resilient.

Like-for-like food sales fell 2.9% in the first half of its year and UBS expects to see this trend worsen in the latest quarter.

“The main risk in non-food will be from margin, where the full price participation may have been below expectations given industry discounting around Black Friday, and the mild weather,” said investment UBS.

“In food, second quarter like-for-like trends were weaker as the business switches from short-term promotions into lower headline prices. This could continue to affect sales short term, although may give a modest margin benefit.”

Shares were up 1.6% to 279.7p on Wednesday afternoon.

View full MKS profile View Profile

Marks and Spencer Group PLC Timeline

Related Articles

Scans and MRI
November 28 2018
The firm's subsidiary, Imaging Biometrics, recently appointed a South Korean distributor a few weeks after receiving the first commercial order for its StoneChecker technology
December 03 2018
“I think customers are seeing that we do offer value and that really is the answer,” said chief executive John Nichols
December 18 2018
MetroRod has been in operation for 30 years but only became a franchise relatively recently

© Proactive Investors 2019

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use