Marks and Spencer
FITTINGLY for a general retailer, Marks and Spencer’s first quarter results on Wednesday will be something of a mixed bag. Analysts are expecting food sales to be up by around 1.5 per cent, with sales of clothes and general merchandise up by 3.7 per cent. But it’s worth remembering that the comparatives are pretty forgiving: M&S had a disastrous start to 2009, with sales off 1.7 per cent.
Some of the improved performance is down to strategy: according to Kantar, the market research group, the turnaround in food is in full swing. In the 12 week period to 14 June, food and drink sales were up 3.6 per cent on the previous three months – the highest increase in two years. And in clothing, the buyers have started to get their act together, instead of bringing in lots of stock just as the season is starting to end.
That said, the bellwether has invested heavily in marketing while remaining competitive on price. It’s inconceivable that this hasn’t taken its toll; shareholders will want to know that M&S can continue to gain market share in food while bringing marketing costs down.
Nor is the outlook particularly rosy: the winds of austerity that are set to sweep through the public sector will feel even chillier thanks to the hike in VAT. And despite a succession plan that was meant to avert a power vacuum when Sir Stuart Rose stepped down, that is exactly what has ended up happening: new chief executive Marc Bolland is in training; Rose is eyeing the departure lounge; and finance director Ian Dyson is off, having failed to win the top job. Shareholders hate uncertainty: M&S offers bags of it.