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Marks & Spencer out of fashion this Christmas: apparel sales to keep dipping

By Angela Gonzalez-Rodriguez

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Business |ANALYSIS

The UK’s former high street fashion darling has seen better years. Marks & Spencer (MKS.L) is expected to report another fall in comparable clothing sales in the last quarter – which include key Christmas sales.

The factors behind this downwards trend seem to be generally agreed upon: squeezed consumers whose confidence remains low, the ‘Amazonisation’ effect tailwinds, and a perceived loss of identity at the British veteran department store chain.

Future doesn’t look promising for M&S’ clothing business

“Like-for-like declines in both core segments...will not help spark a reassessment of the bear case, but we think the numbers would be respectable given the starting point and the market context,” said analysts at Barclays.

And the near future doesn’t look any more promising, according to data collated by Reuters. For M&S’s third quarter to January 6, analysts’ average forecast stands at a 3.4 percent fall in like-for-like clothing and home sales; this is a much worse projection than the previous quarter’s 0.1 percent fall. Analysts are also forecasting a 1.1 percent drop in like-for-like food sales - a fourth straight quarter of decline.

“Consumer confidence is low, and shoppers have exercised extreme caution or shopped strategically online, rather than visiting bricks-and-mortar stores or making impulse purchases. As such retailers, and in particular fashion retailers, have felt a fall in footfall and consumer spend,” said Sophie Michael, head of retail and wholesale at BDO, the business advisory firm.

In this regard, Richard Lim, Chief Executive, Retail Economics added: “Store sales were firmly rooted in negative territory as shoppers chose the convenience of online to orchestrate their Christmas shopping.

It’s worth recalling that Christmas trading updates from British retailers have been so far mixed. This disparity of results has been even acuter among clothing retailers, with Next (NXT.L) beating expectations and upgrading its profit forecast while Debenhams had to issue yet another profit warning.

Photo: M&S White City

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