Marks and Spencer sales slated to fall as rivals' rise
Crunch day for high street as giants reveal festive fortunes
High street giant Marks & Spencer is set to post its sixth consecutive quarter of falling clothing sales this week, despite its rivals enjoying a rise in trading over Christmas.
JD Sports Fashion and Tesco will be in the spotlight with M&S on Thursday, on what will be looked at as a key day for the high street. Tesco is expected to post underlying sales – those in stores open at least a year – ahead of Sainsbury's and Morrisons over the period, and could unveil a new chief executive for its domestic business.
Of the big three listed grocers, City analysts believe that Morrisons was the weakest performer over recent weeks, with its joint house broker Jefferies pencilling in a 2.8 per cent fall in like-for-like sales in the six weeks to 30 December. There were no such problems for the non-food giants John Lewis and Next, which last week announced strong festive figures. Debenhams is this week expected to confirm further underlying sales growth.
M&S is set to disappoint with a clothing and homewares sales fall of 1.5 per cent in the 13 weeks to 29 December, according to consensus forecasts. While this would mark an improvement on the 1.8 per cent fall in general merchandise sales in its second quarter, it would also mean that M&S has failed to grow underlying non-food revenues since the first half of 2011.
Fraser Ramzan, an analyst at Nomura, said: "M&S is changing trading stance from one driven by market share – and often promotion – to a more full-price-oriented approach. This will result in difficult quarters in top-line terms, but over time could help deliver a significant margin opportunity relative to peers."
The food business of M&S, which accounts for about half of sales, is expected to have continued its fine form, with the City expecting like-for-like sales up by 0.5 per cent.
Tesco could anoint Chris Bush, its chief operating officer and a company lifer, as UK chief executive on Thursday, filling the position that has been vacant since Richard Brasher departed last March. The chain is forecast to have grown underlying UK sales by 1 per cent over the festive period, which is likely to be a smidgeon ahead of Sainsbury's this week.
Ahead of its statement tomorrow, Morrisons appears to be losing market share to Tesco and the discounters Aldi and Lidl, although the Bradford-based grocer is still forecast to deliver reduced profit of £875m for the year ending this month.
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