M&S profits set to fall on weak clothing sales

 
Marion Dakers
AFTER THE fanfare of last week’s crucial autumn-winter clothing launch, Marks & Spencer will this week highlight the size of the turnaround task it faces by announcing stagnant annual profits.

Analysts are forecasting pre-tax profits of £658m for the year to the end of March, flat on a year ago and 16 per cent lower than earnings in 2011. On an underlying basis, profits are expected to be seven per cent lower.

The high street giant is expected to announce a 1.4 per cent rise in sales to around £10bn in its annual results tomorrow, with buoyant turnover in the food business offsetting dwindling like-for-like sales in clothing.

Chief executive Marc Bolland and his new fashion executives last week unveiled the latest M&S clothing collection, which he hopes will mark the turning point for the ailing general merchandise unit.

Shares in M&S rose four per cent after the new autumn-winter line and distribution strategy got an initial thumbs up from analysts.

“[The] results are unlikely to encourage consensus 2014 upgrades… but we think that the market should be careful not to underestimate the positive effect that a well-received womenswear collection could have on the company’s financial performance,” said Panmure Gordon analysts.

The results come as some customers reported problems with the firm’s new contactless payment terminals. The BBC found several instances of the card readers picking up payments even when the cards were a foot away from the tills.