Can Marks And Spencer Rediscover Its Magic And Sparkle?
CMC Markets | May 18, 2015 07:21
It's been a long journey for Marks & Spencer Group (LONDON:MKS) Plc (OTC:MAKSY) CEO Marc Bolland over the last five years, but after several false starts, there does appear to be some evidence that we are seeing some small signs of a turnaround in the nation's favourite clothing retailer.
Over the last five years, sector peer Next has been drawing up in the rear view mirror, driven by its superior internet offering, Next Directory, as it looks to overhaul M&S as Britain's largest and most popular clothing retailer.
After an expensive and somewhat problematic overhaul to its own hosted website, there does appear to be some evidence that the M&S turnaround plan finally appears to be gaining traction, as customers slowly get used to the new layout.
At its last trading update in April, M&S delivered its first rise in clothing sales in four years, led by M&S.com where sales rose 13.8%. With food sales already a key and consistent contributor to the company's bottom line this change of fortune, in its General Merchandise side of the business will undergo a key test next week when the retailer announces its full annual results.
That being said one swallow doesn't make a summer, as even dead cats bounce, and the improvement in clothing sales, and women's wear in particular, will need to be sustained on an ongoing basis before we can say that M&S has recovered its Magic and Sparkle, and truly turned a corner.
Given the share price is at seven year highs it is imperative that M&S delivers this week, not only on the top line but also on expectations going forward.
Pre-tax profits are expected to come in at £648m, up from £580m previously, with revenues expected to remain flat at £10.3bn.
The last thing investors want now is another false dawn; we've had five years of them and now is the time to deliver, as the promise of jam tomorrow is starting to wear somewhat thin.
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