As Stuart Rose approaches his first anniversary at M&S, the retailer has failed to demonstrate a turnaround that will raise its share price above the£4.00 a share. That was the price potentially offered by Philip Green for the chain that propelled Rose to the role he now fills. M&S delivered a profit warning to the City in January, when it said it expected to make£25 million less profit before tax ?this year? than analysts expectations at the time.
Shore Capital general retail analyst John Stevenson said that since Rose outlined his original game plan, 'trading has yet to show signs of improvement and we see few catalysts to drive shares higher for now, with the prospect of further downgrades more likely given the current weakness in apparel markets.'
Stevenson conceded that M&S was going for volume sales as its primary goal for recovery and that the new apparel management team headed by Kate Bostock would not have an impact on M&S clothing sales until autumn/winter this year. Nevertheless, he thought that the retailer could see clothing sales disappoint, in line with the consumer slowdown being suffered by other big space apparel retailers.
'On a positive note,' he said. 'The food business showed signs of hope over the third quarter, although we still expect like-for-like sales to remain negative albeit continuing the improving trend shown in Q3.'