M&S poised to report on a difficult quarter for retail

Marks & Spencer
Marks & Spencer

Marks & Spencer is expected to report on another difficult quarter for its beleaguered clothing arm next week, with boss Steve Rowe also tipped to update the market on plans for the retailer’s international operations.

A consensus of City analysts expect like-for-like sales at the firm’s general merchandising division, with includes clothing, to fall by 3.9% in the second quarter.

In July, M&S revealed its clothing arm suffered its worst performance for more than a decade as it cut back on promotions amid a “weak market”, with like-for-like sales plummeting 8.9% in the first three months of the year.

Mr Rowe - who took over from Dutchman Marc Bolland in April - is carrying out an overhaul of the business as he attempts to turn the retail giant around.

A month in, Mr Rowe swung the axe on 525 jobs at head office in a bid to cut costs and later embarked on a major shake-up of staff pay in an effort to mitigate the impact of the National Living Wage.

Kate Calvert, analyst at Investec, said: “Steve Rowe will give part two of his strategic update on November 8. Having set his first priority as reviving clothing sales in May, he is due to come back to the ideal UK store estate in a multi-channel world, international, operations, and capital returns.

“We believe the market already anticipates action in all these areas and is likely to focus on weak trading and profit decline.”

Investec predicts a 23% fall in half-year underlying pre-tax profits to £218 million. Experts also expect plans for the international arm, which has more than 450 stores, including closures as part of a major retreat.

Ms Calvert said operations in Ireland, Czech Republic and Greece in particular as the “main drag” on the international business.