Interim results look positive for M&S

Predictions are that it will hit the interim pre-tax profit mark of £780m.

However, the results could reveal the squeeze being put on the company’s biggest earner – clothing sales. These account for about half of M&S turnover, but sales have been adversely affected by the hot weather.

Bosses have admitted that general sales between July and September were down by 0.6% compared with the same period in 2002, with clothing sales rising by just 0.9%.

The hot weather was blamed as a reason for turning shoppers away and analysts believe the warm autumn so far could also have kept sales down.

This is despite recent figures showing that retail sales generally are growing. Earlier this month, the Office for National Statistics said retail sales continued to rise despite fears that the high street boom was over.

FD Alison Reed will have much to occupy her time as she signs off the results, but also in the equation is the company’s position on FRS17.

Although it continues to account for pension costs under SSAP 24, the company’s annual report revealed that in 2003/04 the profit and loss account charge under FRS17 would hit £142m.

The interims are especially important for M&S as it seeks to consolidate its market position on the back of good results in recent years.

Reed will be hoping that the recent spotlight on cost controls will still pay dividends. ‘We’ve really focused on cost this year to make the business more efficient,’ she said in May.

M&S’s interim figures are also expected to confirm that food sales continue to perform well. However, its newly revamped home furnishings section may come under the scrutiny of the City. Despite headhunting Vittorio Radice from Selfridges at the end of 2002 to lead its home business, sales fell by 1.7% earlier in the year.

One analyst said there would be ‘few surprises’ in the results when they are announced. Another, Rhys Williams of Seymour Pierce, said M&S remained a good investment and that he was confident the profits before tax benchmark of £780m would be met.

Despite a good recent performance, M&S shares fell when the company announced its sales figures for the half-year mark.

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