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Marks & Spencer: Analyst reaction

As Marks & Spencer sees its worst trading since 2008 with sales of general merchandise down 6.8% Drapers takes a look at what the analysts make of the results and the high-profile departure of Kate Bostock.

“M&S’s problems in womenswear go far beyond the weather, as they are clearly losing market share,” said analyst Nick Bubb.

“M&S desperately needs some stability in top management, but Marc Bolland is fighting for his own job, so he has, somewhat predictably, made poor Kate Bostock, the head of M&S Clothing, the scapegoat for the poor first quarter trading.”

Analysts agree that while the market is tough, many of the issues faced by M&S are specific to the business rather than a consequence of poor trading conditions.

“M&S has reported another quarter of sales declines in general merchandise highlight some self-inflicted problems M&S is having in addition to the poor weather impact,” said Caroline Glover, analyst at Espirito Santo.

“The ongoing outperformance of food is making M&S a structurally lower gross margin business”, said Investec analyst Bethany Hocking.

“Clothing still accounts for roughly half of profits, however, so issues there are in need of a solution and the management changes are thus positive, but most don’t occur until October, so it is very early days.”

Singer Capital Markets analyst Matthew McEachran agreed that the management changes could be a good move for the business.

“Overall these changes should help to restore some stability at a critical time for M&S but may take time to bed in.”

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