Jul 4, 2014
M&S to blame bedding in of new website for latest sales fall
Jul 4, 2014
LONDON, United Kingdom - British retailer Marks & Spencer is expected to blame its transition to a new web platform for a 12th straight quarterly fall in underlying general merchandise sales when it gives a trading update on Tuesday.
Britain's biggest clothing retailer, which also sells homewares and upmarket foods, will publish its first-quarter sales figures ahead of its annual shareholders' meeting on the same day.
At the meeting, Marc Bolland, chief executive since 2010, is likely to face criticism from elements of Marks & Spencer's (M&S) army of small shareholders, who own about 30 percent of the retailer's equity, over the lack of a durable pick-up in clothing sales, despite years of heavy investment.
The 130-year-old group is forecast to report a drop in sales of general merchandise - clothing, footwear and homewares - of 1.0 percent to 2.0 percent at shops open over a year in the 13 weeks to June 28, according to a company poll of 11 analysts.
The average forecast for a fall of 1.5 percent compares with a 0.6 percent decline in the fourth quarter.
M&S cautioned in May its new website, which went live in February, would take up to six months to "settle in". It said this was normal in the industry and denied there were problems with the site.
Bolland is expected to say on Tuesday that better in-store clothing sales evident in the fourth quarter of M&S's 2013-14 year continued into the first quarter, with the web transition particularly hitting sales of homewares.
The new website is a pillar of M&S's intended transformation into an international retailer reaching customers through stores, the web, tablets and mobile devices.
Bolland has spent 2.3 billion pounds in the last three years pushing through changes to address decades of under-investment, overseeing the redesign of products and stores and an overhaul of logistics to serve the new website.
M&S's food business, which contributes over half of group sales, has been performing better much than clothing, outperforming the wider food market.
Analysts forecast first-quarter like-for-like food sales up 1.5-2.5 percent, with the consensus at 2.0 percent - a nineteenth straight quarter of growth, helped by Easter falling in M&S's first quarter this year.
"Whilst we expect the market to applaud the performance in food ... there will probably be concern and worry by investors about the general merchandise performance, most particularly ladieswear," said Shore Capital analyst Clive Black.
Analysts are currently on average forecasting a 2014-15 pretax profit of 663 million pounds, up from 623 million pounds in 2013-14.
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