Marks and Spencer Share Price: Retailer Poised to Miss Sales Targets

on Jul 4, 2013
Listen, Thursday, July 4th: Marks & Spencer Group Plc (LON:MKS), will miss even the less ambitious sales targets for the year to March 2014 that it set only last year, the Financial Times has reported, citing Citigroup Inc (NYSE:C) forecasts. The undershoot takes into account the group’s performance in the UK, where market conditions have been tough.

The Marks and Spencer share price was up 1.5 percent at 448.04p in early London trading on Thursday.

**Lowered targets**
Citigroup, joint broker to the UK retailer, has forecast M&S sales for the current fiscal year at £10.32 billion, which is lower than the retailer’s current target for sales of £10.8 million to £11.5 million. This target represents a reduction from earlier targets, set in November 2010 in the M&S three-year strategic blueprint. Back then the retailer aimed to increase sales from £9.7bn in the 2010-2011 financial year to between £11.5bn and £12.5bn by the end of this financial year. However, in May 2012 M&S lowered those targets to their current level blaming the weakness of the UK economy. And it seems now that M&S may miss even those lowered targets due to tough conditions in the UK market, which have adversely affected its performance. The group had also suffered some self-inflicted problems in general merchandise – clothing and homewares – particularly in womenswear, the FT reported yesterday, citing unnamed sources.

According to the FT, the M&S is unlikely to formally revise down the sales targets for a second time. The group reports its 2013-2014 financial results in May 2014, and these will be judged against the three-year strategic plan. M&S said it did not comment on analysts’ forecasts.
Another goal set in November 2010 was to increase online and international sales, excluding the Republic of Ireland, by between £300 million and £500 million respectively in the 12-month period ending March next year. According to unnamed sources cited by the FT, this goal would be achieved.

**Analysts’ forecasts**
According to Credit Suisse analyst Simon Irwin, Marks and Spencer’s international sales, excluding Ireland, will be £790 million this year, which is broadly in line with the group’s target. Irwin, however, has estimated that the retailer would need to increase online sales by about 22 percent this year to meet the lower end of its £800 million – £1 billion target.

!m[M&S Top Executives to Face Shareholders Next Week](/uploads/story/3667/thumbs/pic1_inline.png)
According to recently released industry data, clothing sales at M&S declined at a slower pace in May. Analysts have issued a consensus forecast for a 1.5 percent drop in like-for-like general merchandise sales in the quarter to the end of June. That compares with a 6.8 percent decline in the corresponding period a year earlier. Like-for like food sales are projected to rise 1.6 percent, reflecting M&S stronger

performance in that category.
Forecasts of lower-than-projected sales come shortly before Mark and Spencer’s annual meeting next week where Chief Executive Officer Marc Bolland and Chairman Robert Swannell will face the group’s private shareholders. The top executives will also give an update on trading.
**The Marks and Spencer share price was 449.90p as of 10.11 GMT, 04.07.2013**


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