British Department Store Retailer Martha Continues To Be Viewed By Analysts.

Britain's first quarter results will be released on Thursday. Department store Retailer Marks&SpencerGroupPLC Martha M&S continues to be viewed by analysts, especially the company's poor clothing business.

In the latest report, PeelHunt, a London investment bank, predicts that the general merchandise department of Marsha M&S will slump 6%-7% in the first quarter than sales, and the outlook is bleak. Most industry analysts expect M&S of Marsha general. clothing There will be a 4% decrease in business.

At the end of May, SteveRowe, chief executive of the new Marsha general store M&S, put forward a restructuring business plan in its annual report, saying that the growth of clothing and home business was the top priority of the group. However, the company did not set a timetable for its growth plan.

In fact, since SteveRowe formally replaced its predecessor MarcBolland in April 2, 2016, it immediately responded. Marsha Department store M&S conducts a 6 week strategic assessment. SteveRowe carried out management reorganisation in mid May, followed by the operation of existing products and stores. Restructuring measures included reducing the number of styles, cutting 1/3 prices by more than 10% and reducing discounts. The group will also make improvements in terms of product supply, quality and fitness, and the number of sales staff will increase. SteveRowe is also currently the executive director of general commodity department.

However, for the above measures, PeelHunt analyst JonathanPritchard pointed out that SteveRowe did not have additional conditions to test its business in the first quarter. Although some of its measures seemed sensible, it was impossible to resist more negative conditions in the first quarter because of its late arrival.

High street fashion in Britain has entered an unprecedented predicament in 2016. The high street market in the UK has been languished, but no growth has been seen in the first 5 months of this year, although the 1.9% decline in May is much better than the 6.1% decline in April, but it is worse than the three months before 2016.

In April, many British high street brands declared bankruptcy, and the British referendum had a negative impact on the high street market in the UK. Under this background, the highly competitive high street market continued to suffer from profit pressure.

In addition, data released by Markit, the industry data service provider, showed that British household economic pressure reached its peak in the past 20 years in 2016, mainly due to the sharp slowdown in wage growth and the pressure caused by inflation.

In addition to external economic reasons, consumer trends from simple buying behavior to experiential consumer items are obvious. Another uncertain factor is abnormal weather in Britain.

Since October 2015, in the past 8 months, only 2016, January, HighStreetSalesTracker (HSST) has increased by 1.7%, and the other 7 months have fallen. However, January as a traditional holiday season belongs to the peak season.

Marks&SpencerGroupPLC chief executive officer, M&S, Marsha general store SteveRowe

It is not just the prospect of M&S in the first quarter of Marsha's department store, but actually the market has a negative attitude towards the whole so-called revitalization plan of SteveRowe.

Analyst TonyShiret criticized in the previous research report that the strategic plan displayed in Martha's M&S financial report lacks clarity. CantorFitzgerald analyst FreddieGeorge also believes that the plan has no surprises and revolutionary measures and is disappointing.

As of the 2016 fiscal year of April 2, 2016, the M&S clothing and home department of Marsha general store has fallen for five years in comparison with sales. It has recorded a 2.9% decline in the whole year. The Group recognizes that the clothing business has lost the market share and the market share has been lost during the year. Therefore, the group has set the right remedy for the group to make a profit of 60% for the group, not only combining the three major units of women's wear, underwear and beauty, but also changing the purchasing mode, from purchasing according to the sub brand to purchasing by product category. In addition, in the fourth quarter, about 300 core products in the sector have taken the lead in reducing prices, and the supply of products has also improved.

However, the only fortunate thing is that M&S continued to achieve profit growth in fiscal year 2016, adjusted by a pre tax profit of 689 million 600 thousand pounds, an increase of 4.3% over the previous year's 661 million 200 thousand pounds.

However, the biggest contributor to the M&S profit growth of Martha's Department, the purchasing director, MarkLindsey and NealLindsey, will be left after the 2017 contract expires, and the Lindsey brothers are the "legacy" of SteveRowe's former MarcBolland.

Once the Lindseys brothers leave, it means that the efforts of Marsha general M&S to improve gross margins will be abandoned. The company will enter new profit pressure, and whether it can really improve the clothing business is still unknown. Therefore, SteveRowe's strategy is considered to be quite risky. In fact, in the 2016 earnings report, SteveRowe also pointed out that the revival of the clothing business plan is hard to overlay the current business environment, and the impact on sales will have a negative impact on short-term profits. Before the 2016 annual report, the market expected that the group will achieve a pre adjusted profit of 710 million pounds and 744 million yuan respectively in the current and next two years, which means 3% and 4.8% growth respectively. But after the earnings announcement, ExaneBNPParibasSA (BNP.PA) SimonBowler, an analyst at Paris bank, France, pointed out that the market now expects the group to adjust its pre tax profit by about 12% this year. Although the company claims that the procurement reorganization will continue to promote the increase in gross margin, the gross profit margin of the general merchandise sector in fiscal year 2017 is expected to rise by 50-100 basis points, and the gross profit margin of the Department in fiscal 2016 is 55.1%, with 240 basis points.

In addition to its poor performance, the performance of M&S in the open market is even more surprising. In the day of the British Brexit referendum, the company's share price plummeted 20%, creating a 7 year low since 2009 after the financial crisis. The company's stock price has dropped 29.24% as of Friday's closing date so far this year, while the FTSE100 index has a 5.37% increase over the same period. In the past 12 months, the stock price of the company has fallen more than 40%.