M&S tipped for profits drop after clothing sales slow

The firm has already warned that a turnaround will take time
The firm has already warned that a turnaround will take time

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 £684m the previous year.

CEO 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.