Jul 8, 2011
M&S seen beating retail gloom with sales rise
Jul 8, 2011
July 8 - Retailer Marks & Spencer is set to report a seventh consecutive rise in underlying quarterly sales as its older and more affluent customers cope better than most with a squeeze in disposable incomes.
A Marks and Spencer - Store in Hong Kong - photo: corbis
M&S, Britain's biggest clothing retailer which also sells upmarket foods and homewares, is forecast to report on Wednesday that sales at UK stores open over a year rose 1-2 percent in its fiscal first quarter to end-June, according to a poll of seven analysts provided by the company.
Such an outcome compares with a fourth-quarter rise of 0.1 percent, or an increase of 2.2 percent stripping out adverse calendar effects, and reflects a strong April when trade was boosted by warm Easter weather and spending ahead of the Royal Wedding holiday weekend, but a more subdued May and June.
M&S's like-for-like general merchandise sales, spanning clothing, footwear and homewares, are forecast in a range of down 0.5 percent to up 1 percent, having fallen 3.9 percent in the fourth quarter.
Food sales on the same basis are seen up 2-3.5 percent, having increased 3.4 percent in the previous quarter.
But M&S, which serves some 21 million people a week from about 700 stores and has more than 320, mainly franchise, stores in 41 territories, may flag increased margin pressure from higher-than-expected markdowns, as, like rivals Debenhams and John Lewis, it began its summer sale early.
The firm is likely to reiterate its expectation that trading conditions in the balance of the year will be tough due to pressure on consumers' incomes and high commodity prices.
Consumers are grappling with rising prices, particularly in fuel and utilities, subdued wages growth, a lack of credit, job insecurity, a stagnant housing market, government austerity measures and fears of interest rate rises. This has led to a recent spate of retail failures.
A year into the job, M&S Chief Executive Marc Bolland is in the enviable position of being able to develop his plans for the group while it is winning market share.
The former boss of Britain's fourth-biggest grocer, Wm Morrison Supermarkets, who joined M&S on a 15 million pounds pay deal, has so far been true to his pledge of carrying out "evolution not revolution."
As well as working to improve the 127-year-old firm's product offer, stores, marketing, logistics and technology, Bolland has made key appointments to his management team. Innovation is at the heart of his strategy, which also focuses on expanding online and abroad.
Shares in M&S, which have increased 10 percent over the last year, closed on Thursday at 377 pence, valuing the business at about 5.97 billion pounds.
The shares remain below the 400 pence level of British retail billionaire Philip Green's indicative takeover proposal in 2004.
Luxury group Burberry is expected to post a 22 percent rise in first-quarter profit to 344 million pounds on Wednesday, according to the average forecast of 11 analysts polled by the company.
The 155-year-old maker of raincoats and handbags, best known for its camel, red-and-black-check pattern, is benefiting from surging demand from tourists and Asian markets, as well as new stores.
Retail sales are tipped to have risen 35 percent to 230 million pounds, including a 9 percent increase from stores open at least a year.
Burberry shares have climbed more than ninefold in less than three years, helped by speculation the group could become a bid target in a luxury sector hotting up with deals. The stock hit a record 1,494 pence on Wednesday.
In a busy week for the sector, updates are also scheduled from fast-growing fashion retailer SuperGroup (Wednesday), and Primark owner AB Foods, internet fashion retailer ASOS, sports retailer Sports Direct and mother and baby goods retailer Mothercare.
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