Marks & Spencer Slides Amid Fresh Sales Concerns: London Mover
Marks & Spencer Group Plc (MKS), Britain’s largest clothing retailer, fell the most in almost two months after Credit Suisse reduced sales and profitability estimates and as a report showed U.K. fashion sales declined in September.
The quarter ended last month was slower than expected for Marks & Spencer’s non-food division, Credit Suisse analyst Simon Irwin said in a note today. He estimates that same-store sales fell 1.5 percent, compared with a previous projection of 0.5 percent growth. Irwin also estimates the gross profit margin narrowed by 40 basis points because of “higher markdown over the summer and an earlier mid-season sale.”
A drop in the general-merchandise division’s quarterly same-store sales would be the ninth in succession, ratcheting up the pressure on Chief Executive Officer Marc Bolland. The retailer, which is pinning its hopes on a revived autumn-winter range that came into stores on July 25, is due to report revenue for the period when it announces first-half earnings Nov. 5.
“While the long-awaited autumn-winter ranges show some signs of improvement, we do not believe they are sufficient to transform like-for-like sales or margins over the next year,” Irwin wrote in a note. He rates the stock underperform.
September was “a challenging month” for British clothing retailers, with sales falling 2.1 percent compared with the same month in 2012, according to BDO LLP’s High Street Sales Tracker.
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