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Marks and Spencer, John Lewis still face hurdles after worst year for retailers

“There are definitely some missteps in it, but let’s not forget it has undoubtedly been a very difficult time for retail,” analysts said

Marks and Spencer - John Lewis

Christmas trading figures from Marks and Spencer Group PLC (LON:MKS) and John Lewis Partnership proved the struggle is real for Britain’s mid-market retailers.

But could they be pardoned for their lacklustre sales considering 2019 was the worst year on record for the High Street, according to the British Retail Consortium (BRC)?

The downside for both firms was mitigated by their respective food offerings.

That said, the 10% tumble in Marks’ share price post the festive update tells its own story and underlines investors’ worries.

For the employee-owners of John Lewis, a poor Christmas period is likely to be reflected in profit-share payments, or lack of them.

So, to that BRC survey: it showed retail sales excluding food dropped 1.4% in December, while over the 12 months the decline was 1.3%.

There was also a change in trend with November’s Black Friday hunt for bargains overtaking the final December present push.

“Retailers also faced challenges as consumers became both more cautious and more conscientious as they went about their Christmas shopping,” added the BRC’s Helen Dickinson.

Setting aside the latest industry data, both Marks and John Lewis have an issue of “relevance”, according to analysts at Peel Hunt.

John Lewis’s new chair Sharon White, meanwhile, will have a tough nut to crack once she starts in February, especially after managing director Paula Nickolds announced her departure by surprise.

For M&S, part of the problem may be organisational.  “It would be fair to ask if at least some challenges are coming from simply not having the right items on the shelves,” said Hargreaves Lansdown analyst Sophie Lund-Yates.

However, Patrick O'Brien, UK retail research director at GlobalData, was a little more charitable.

“There are definitely some missteps in it, but let’s not forget it has undoubtedly been a very difficult time for retail,” he told Proactive.

“It has been a pretty dismal Christmas, only few retailers are doing exceptionally well.”

Quick facts: Marks and Spencer Group PLC

Price: 184.55 GBX

LSE:MKS
Market: LSE
Market Cap: £3.6 billion
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