Tuesday preview: M&S to report drop in first half profits

Marks & Spencer reports its first half results on Tuesday as the retailer undergoes a major restructuring to turn around its struggling general merchandise business.

The company is expected to report another drop in profits as chief executive Steve Rowe implements his turnaround plan, which includes cutting prices and improving the quality of clothing items under the general merchandise division.

Last week reports emerged that Rowe was looking to shut dozens of shops in Britain and change some of its other stores into its more successful Simply Food outlets. The company has 914 stores in the UK, including 302 which sell its clothing range.

Numis expects first half pre-tax profit of £225m, down from £289.5m the same period a year earlier.

Following a weak first quarter update in July, Numis said clothing sales in the second quarter is likely to have been affected by the warm weather in August and September.

However, the broker sees an improvement from the first quarter run-rate given the reducing promotional trend through fiscal year 2015.

In Food, Numis predicts “another solid performance” and expects a return to positive like-for-like sales.

“We expect an update on the stores and costs element of the business, with the 'root and branch' review of the business having now been largely completed,” Numis analyst Andrew Wade said.

“We see little to argue with in the strategy to date but, particularly set against a deteriorating consumer backdrop, we believe that M&S will find it difficult to drive material improvements in its Clothing & Home operation.”

Tuesday 08 November

INTERIMS
Aveva Group, Grafenia , Marks & Spencer Group

INTERIM DIVIDEND PAYMENT DATE
Travis Perkins

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Balance of Trade (GER) (07:00)
Current Account (GER) (07:00)
Industrial Production (GER) (07:00)

FINALS
Associated British Foods, Ceres Power Holdings, Imperial Brands , Imperial Brands , Punch Taverns

IMSS
Direct Line Insurance Group

AGMS
Craneware, Genesis Emerging Markets Fund Ltd Ptg NPV, Global Petroleum Ltd., Ortac Resources Ltd. (DI)

TRADING ANNOUNCEMENTS
Direct Line Insurance Group

UK ECONOMIC ANNOUNCEMENTS
Industrial Production (09:30)
Manufacturing Production (09:30)