M&S continues to stumble

Marc Bolland is running out of time for his three-year restructuring project to bear fruit and appease investors.

Marc Bolland and his predecessors have found it difficult to change the demographics of Marks & Spencer's core customers over the last 5-6 years. They have tried to shift the broader retail customer’s assumption that only middle-aged women shop there. Balancing the advertising between attracting a newer younger customer through the door, while at the same time ensuring that they do not alienate its existing base, has been problematic.

The structure of the M&S stores, as clothing shops with an extensive food division, has also come under pressure from food retailers. The big four supermarkets have diversified into white label goods and clothing, so copying M&S’s template in reverse.

So where does M&S stand now? With food retailers about to embark on a pricing war, the premium on its food will become even larger and undoubtedly affect sales, as clients become increasingly aware of this discrepancy with competitors. Any downturn in demand for the food division at M&S could have serious consequences for the clothing arm too, as food retail has generally helped drive footfall in the clothing departments.

A number of institutional notes have downgraded their targets and outlook for M&S over the last couple of weeks, and it is anticipated that sales in the food department will have increased by just 0.1%, with a fall of 1% in the clothing department.

Looking at the share price, the 450p level has offered some support but with a less-than-rosy outlook, a retest of the January’s lows just below 430p is possible. 

Marks & Spencer chart

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