Marks & Spencer Clothing Sales To Fall Again

Britain's Marks & Spencer is expected to report another fall in comparable clothing sales in its Christmas quarter, though the major grocers are forecast to report solid trading as cash-strapped consumers prioritised spend on food and drink.

Christmas trading updates from British retailers so far have been mixed. Clothing chain Next provided some initial cheer, beating expectations and upgrading its profit forecast. But the mood was quickly soured by a profit warning from department store chain Debenhams.

With Britons being squeezed by slow wage growth and a jump in inflation that followed the 2016 Brexit vote, overall expectations going into the key Christmas trading period were subdued.

Sophie Michael, head of retail and wholesale at BDO, the business advisory firm said “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.

For M&S's third quarter to Jan. 6 analysts are on average forecasting a 3.4 percent fall in like-for-like clothing and home sales - much worse 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.

M&S, which said in November it would speed up store closures and re-position its food offer, will likely point to harder comparative numbers with last year in the third quarter compared to the second and the tough overall market when it reports on Thursday.