M&S blame the warm weather for poor sales
Tuesday 28 September 1999
M&S said the "Indian Summer" during the early part of this month had caused customers to "defer" purchases of autumn clothing.
The company is not due to report its half-year results until November but was forced to issue a statement to the stock market after prolonged speculation about poor trading.
The concerns had pushed the group's shares to a seven-year low at the end of last week. Yesterday they closed 14.5p higher at 315.5p after the company said last week's cooler weather had started to help sales. But City analysts were sceptical about the prospects of a short-term recovery at M&S, with some saying warm weather was only part of a much bigger problem.
"Their autumn/winter ranges are still not good enough or at the right price. They are suffering by comparison with other high street rivals," said Philip Dorgan at WestLB Panmure.
M&S said its profits in the first six months of the year would now be around pounds 195m rather than the pounds 210m analysts had been expecting. Analysts also cut full-year profit expectations to about pounds 555m. Two years ago M&S profits topped pounds 1.2bn.
The profits warning is the latest in a series of setbacks at M&S. The group has been struggling for almost a year after a slump in sales last autumn led to a bloody boardroom battle at the normally staid group. Since then M&S has scrapped management jobs and is trying to lift sales with lower prices, new designs and better looking store lay-outs.
There was further evidence of tough trading conditions on the high street yesterday when Storehouse, the retail group that owns Bhs and Mothercare, said it would report a loss of up to pounds 20m for the first-half of its financial year. The group is now considered a takeover target.
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