M&S shareholders face another dose of gloom

MARKS & SPENCER shareholders are bracing themselves for further gloom on trading as fears grow of a wider slowdown in high street spending.

Chief executive Stuart Rose has already warned half-year profits will be down tomorrow, but he is likely to add another dour assessment on current sales.

His comments will reflect difficult trading conditions as figures also due this week from the British Retail Consortium and KPMG are expected to show near-stagnant sales growth during October.

That will heighten fears that five interest rate rises and soaring energy bills have forced shoppers to tighten their belts in the run-up to Christmas.

Further sales disappointment at M&S could lead analysts into another round of profit downgrades for the year to March 31.

Expectations had been as high as £855 million in January, but City forecasts could dip to £715m, compared with £1.1 billion in 1998. At the half-year stage, M&S has already signalled profits of between £285m and £295m - down on the £311m seen a year ago.

Mr Rose, who took over as chief executive as part of the company’s response to a takeover approach by Bhs owner Philip Green, is likely to use the results to further outline his strategy for reviving the ailing retail giant.

According to the Observer, he will axe the per una due sub-brand and look to focus on core customers rather than compete in the youth market.

Mr Rose has already renegotiated supply agreements and acquired core clothing brand per una as he looks to convince the company’s army of small shareholders that he can generate more value than Mr Green’s recent £9bn offer.

While the clothing strategy will face examination, analysts will also want reassurances about the faltering performance in M&S food halls.

On a positive note for the company, its growing number of Irish stores are expected to report higher sales, with increases in food revenues forecast.