Retailer to reveal Christmas profit

The high street is to come under scrutiny again as retail giant Marks & Spencer reveals how well it performed over Christmas.

The household name enjoyed a good run in 2010 with like-for-like sales consistently beating expectations and profits in the first half of the financial year up 17% at £348.6 million.

But fellow high street retailers – such as Next, Debenhams and HMV – have revealed difficult trading in the run up to Christmas as sub-zero temperatures and snow kept potential shoppers indoors.

Analysts’ consensus figures predict total like-for-like sales will be up 2%, which includes a 1.5% rise for food and 2.5% for general merchandise, such as clothing.

But one analyst – at Deutsche Bank – believes Marks & Spencer could have lost up to £70 million of sales due to the severe weather last month, as the upper end of M&S’s older customer base may have struggled to get into stores throughout December.

The trading update will be the first since new chief executive Marc Bolland unveiled his three-year plan, including a drive to place the chain’s own brand at the forefront of the vision for the business.

In clothing, as well as boosting the chain’s own brand, the company plans to invest in its sub-brands – such as womenswear ranges Per Una and Indigo Collection – through improved marketing and clearer positioning in stores.

Mr Bolland also plans to strip back the non-M&S food lines on offer, but the company will increase the total food range from 7,000 to 8,000 lines. The former Morrisons boss also said £150 million will be invested into the group’s online business.

Jean Roche, analyst at brokers Panmure Gordon, said increasing investment over the next three years puts pressure on the company to deliver higher profit margins at a tough time for the UK consumer.

But she added: “We are positive on M&S’s brand, relative exposure to a more wealthy customer, its multichannel model, its growing international business and the recovery and repositioning of the food business.”