The slump in British retail is set to hit Marks and Spencer hard this week, after poor financial results from rival Next and supermarket Tesco.
Weak sales figures will pile increasing pressure on chief executive Marc Bolland – like-for-like sales have already fallen for the past 13 quarters, despite the growing economic recovery.
The consensus among analysts is that Marks and Spencer will on Wednesday report a 3.7 per cent decline in like-for-like general merchandise (GM) sales and a 0.2 per cent rise in food sales during its second quarter.
Such forecasts represent a substantial slowdown from the 1.5 per cent fall in GM and 1.7 per cent rise in food it reported in the first quarter.
Investors are increasingly shunning the high street stalwart – its shares currently stand at 406.7p, down from this year’s peak of 512p in February.
Official figures show hedge fund Lone Pine is vigorously shorting the firm’s shares. Lone Pine has borrowed 1.56 per cent of the retailer’s shares, the Financial Conduct Authority said, making the size of its interest on a par with the biggest 20 shareholders in the company.
Major retailers have taken a beating in recent months. Next was forced to put out a profit warning last week as the firm cut its central profit guidance by three per cent. And Tesco last month reported a 92 per cent crash in profits for the third quarter.
Analysts also believe Marks and Spencer is failing to make the most of the growing online market.
“The waiting game continues. We believe the recent sell-off in the shares reflects the market discounting likely disappointing first half results,” said Investec in a note.
“With like-for-like sales figures looking set to be negative in both business [Investec forecasts a 0.1 per cent decline in food sales] and no improvement in the M&S.com run-rate likely, we don’t expect much hard evidence to support a recovery thesis yet.”
Tim Wallace, Oliver Smith