Marks & Spencer expected to reveal half year profit fall
A consensus of City analysts forecast that underlying pre-tax profit for the first half of the year will drop 13% to £201 million
Marks & Spencer is expected to unveil another set of grim numbers next week as investors await a progress report on the high street giant’s turnaround.
A consensus of City analysts forecast that underlying pre-tax profit for the first half of the year will drop 13% to £201 million when the retailer releases figures on Wednesday.
Like-for-like sales at the group’s troubled clothing and home division are predicted to slump 1.5%, while comparable food sales are expected to fall 0.3%.
In July, chief executive Steve Rowe said sales at its clothing arm were moving in the “right direction” following a dismal final quarter last year when sales tumbled 5.9%.
At M&S’s half year results in 2016, Mr Rowe signalled an overhaul of the group’s strategy that involves closing under-performing stores and cutting back on clothing while boosting its food arm.
George Salmon, equity Analyst at Hargreaves Lansdown, said: “This time last year, the group unveiled a new strategy.
“The key themes were a rationalisation of sales space and the continued roll-out of the foods business.
“Investors will be looking forward to reading about progress over the last 12 months.”
But Mr Rowe has been rocked in recent weeks by the departure of Jo Jenkins, a senior member of its clothing division, just weeks after she started a new role.
Ms Jenkins, appointed as the firm’s director of clothing and beauty in May, left M&S to become chief executive of White Stuff in October.
To compound matters, retailers across the board have been stung by rising costs and falling consumer confidence as Brexit fuelled inflation hits the sector hard.
M&S has already warned of tough conditions on the high street and the latest trading update will come ahead of the critical Christmas trading period.
But Darren Shirley, analyst at Shore Capital, it not expecting fireworks.
“We do not anticipate fireworks at or immediately post M&S’s forthcoming results, rather confirmation that another staging post has been reached in CEO Steve Rowe’s multi-year turnaround and overhaul of the entire M&S group, one that will see the food retailing activities take an increasingly prominent role,” he said.
The results will also be the first under M&S’s new chairman Archie Norman.
Mr Norman, who succeeded Robert Swannell in September, is best known for turning Asda around in the 1990s.
Mr Shirley added: “We see Mr Norman and Mr Rowe as an interesting and potentially exciting combination for M&S’s shareholders, particularly given Mr Rowe’s strategic restructuring of the business in the UK and abroad allied to Mr Norman’s track record of transforming businesses such Asda, Kingfisher and Energis.”