M&S tipped to post lower annual profits after short-lived clothing sales revival
Retail giant Marks & Spencer is expected to post lower annual profits and reveal its clothing sales revival came to an abrupt halt at the start of the year when it reports on Wednesday.
M&S cheered its first rise in clothing and home sales for nearly two years in January, but this is expected to be only a temporary reprieve as the timing of Easter is set to have impacted its fourth quarter trading.
Analysts predict clothing and home sales fell by 3.3% in the three months to the end of March, against a 2.3% hike the previous quarter.
Food sales are likely to have fallen by close to 1% in the final quarter.
This will see the group's year end on a sour note, with underlying pre-tax profits also set to dive 13% to £593 million from £684 million the previous year.
Chief executive Steve Rowe has already warned that profits would take time to recover as its clothing turnaround beds in, but the third quarter trading gave hope that it is beginning to turn the corner.
Analysts at Numis Securities said that stripping out the effects of this year's later Easter, clothing sales are likely to have been close to flat, while Peel Hunt believe underlying sales rose by 0.5%.
Jonathan Pritchard at Peel Hunt added that sales will have "regained their poise" since the Easter-affected fourth quarter.
He said: "We think that the immediate changes that management made to the offer, merchandising and service are starting to resonate with customers."
M&S has recently poached the chief executive of Halfords - Jill McDonald - to lead the turnaround in its clothing business.
She has been recruited into the new role of managing director for clothing, home and beauty, joining the retailer in the autumn of this year.
The group has also named well-respected former Asda boss Archie Norman as its new chairman from September 1, to succeed Robert Swannell, who is retiring after six years in the role.
Mr Pritchard said his appointment to the chain was welcome news. "Who better to chair a recovery than Archie?," he said.