Marks & Spencer is expected to reveal next week that trading deteriorated during its second quarter, confirming fears about the depth of the retail downturn.
Citi analysts forecast that M&S's UK division will post like-for-like sales down by 6.7 per cent for the 13 weeks to 27 September. The retail bellwether's Q2 trading statement will put down an ominous marker for what is expected to be a torrid lead up to the crucial Christmas trading period for UK retailers. On 2 October, Citi expects M&S to reveal UK food like-for-likes down 5.5 per cent and general merchandise lower by 6.8 per cent over the 13-week period.
These figures represent a further slowdown on the profit warning M&S issued on 2 July, when it said UK like-for-like fell 5.3 per cent, general merchandise dropped 6.2 per cent and food tumbled 4.5 per cent for the 13 weeks to 28 June. Given that food price inflation is running above 3 per cent, M&S is thought to be experiencing high single digit declines in like-for-like food volume sales. Clothing and footwear are thought to account for about 90 per cent of M&S's general merchandise sales. Citi said there was a "downside risk" to its forecasts, implying that it may report lower sales. In a research note, Citi analysts also said that M&S has lost market share in clothing and footwear over the past year. For the 24 weeks ending 17 August, M&S sales growth fell by 4.1 per cent, compared to the previous year, to give it a 9.7 per cent share of the market, according to TNS Worldpanel. While Primark's implied sales growth was minus 3.7 per cent, department store Debenhams and grocer Asda delivered fashion sales growth of 4.8 per cent and 4.3 per cent, respectively. Separately, grocery giant Tesco is expected to post solid UK sales growth next week on 30 September, boosted by price inflation and its renewed focus on price promotions over the summer. Dresdner Kleinwort forecasts that Tesco UK will deliver second quarter like-for-like sales growth of 4 per cent, excluding fuel, and total international sales growth of 26 per cent. However, James Grzinic (correct spelling), the Dresdner Kleinwort analyst, said such sales for its UK business would be "somewhat underwhelming", given soft comparable sales, higher inflation and "Tesco's greater trading aggression".Reuse content