Analysts at Goldman Sachs expect Marks and Spencer Group PLC (LON:MKS) to record another double-digit drop in profits this year after a “disappointing” opening few months.
M&S posted an adjusted pre-tax profit of £523.2mln for the 12 months ended 30 March, down from £580.9mln a year earlier.
Having crunched the numbers, Goldman expects a similar fall – around 11% – in the current financial year, having pencilled in a pre-tax profit of £464.4mln.
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“Recent M&S trading patterns have continued to be disappointing,” noted the analysts, citing the latest Kantar data.
According to Kantar’s research, M&S’s clothing sales in the UK fell by 8% in the three months to the end of June, while food sales dropped by 1% year-on-year.
Once the reduced store space is taken into account, Goldman estimates that first quarter like-for-likes were down 5% and 0.5%, respectively
To make things worse, the second quarter also got off to a poor start, with Kantar reporting an 8% drop in clothing sales in July.
Marks is still the UK’s largest clothes retailer, but has lost ground to competitors.
Alongside the expected drop in profits, Goldman cited M&S’s falling clothing market share as a key reason for its ‘sell’ recommendation and bearish 170p price target.
Shares were down 0.5% to 191.4p on Monday afternoon.