Marks & Spencer Extends Decline on Doubt Over New Fashion Range

Marks & Spencer Group Plc (MKS), Britain’s largest clothing retailer, fell for a third straight day as Sanford C. Bernstein cut the stock to underperform, adding to a recent tide of negative analyst opinion.

The shares slid as much as 3.7 percent to 462.4 pence, extending yesterday’s 2.8 percent drop. They have fallen 7.4 percent in three trading days, the most since September 2011.

Marks & Spencer’s revived autumn-winter fashion range is likely to fall short of the “revolution” needed to spark a turnaround in the retailer’s U.K. non-food division, Bernstein analysts said today as they cut their rating from market perform. Chief Executive Officer Marc Bolland is pinning his hopes on the new collection, which came into stores on July 25.

“We are skeptical that a dramatic turnaround will materialize in the near-term,” analysts led by Jamie Merriman said in a note. Bernstein’s earnings estimates for the 2015 financial year are 6 percent below consensus, he said.

Credit Suisse analyst Simon Irwin said yesterday that the quarter ended last month was slower than expected for Marks & Spencer’s non-food division. Also yesterday, BDO LLP’s High Street Sales Tracker reported that September was “a challenging month” for British clothing retailers, with sales falling 2.1 percent compared with the same month in 2012.

Bernstein today cast doubt on the potential for Marks & Spencer’s latest clothing range, which Bolland is counting on to help halt eight straight quarters of declining same-store sales in the retailer’s U.K. general-merchandise division.

The brokerage said it surveyed a group of 50 to 70-year-old women and others in their thirties and found that neither customer group felt that much has changed in the new collection relative to their expectations.

Marks & Spencer was down 2.7 percent at 467.5 pence at 9:44 a.m. in London, trimming this year’s gain to 22 percent.

To contact the reporter on this story: Paul Jarvis in London at pjarvis@bloomberg.net

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net

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