Marks & Spencer is expected to announce a slowdown in its falling sales this week. M&S seems to be finally fighting back, and has apparently managed to reduce the rate of sales decline. Its Per Una women’s clothing range looks set to boost future sales. Yet this is just the start of a long-run process.

M&S needs to ensure it keeps seizing the initiative – and must also improve its demand assessment, after bungling the Per Una launch. Good news has been hard to come by for

Company Profile:

Marks and Spencer Plc

Marks & Spencer recently. The high profile closure of its European operations together with continued falls in sales have caused many to doubt the future prospects of the British retailer.

However, Q2 results set for release on Tuesday, are expected to show an overall drop in sales of 2%, compared to 3% for Q1 (M&S’ financial year ends on March 31). While some of this slowing reflects strong sales in the company’s food business, the decline in clothing sales is also thought to have slowed, from 9% in Q1 to between 7% and 8% in Q2.

The figures will only partially reflect the recent success of the new Per Una women’s clothing range, with Q2 covering only the first two days of Per Una’s trading. The new range generated massive consumer demand, with M&S finding itself unable to meet demand for the products.

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The much-hyped recruitment of George Davies, one-time Next and Asda clothing guru, to design the range, seems to have had the desired effect.  While it may smack of bad planning that M&S ran out of stock just a few days after the launch, at least M&S can still make clothes that people want to buy – something it has recently struggled to do.

These figures will be the first set of results to be fully attributable to the new management team installed this year. Clothing sales are showing signs of picking up, with M&S executives said to be especially encouraged by sales of its new Perfect range, consisting of 60 lines for both men and women, which was launched with the autumn collection.

Although this is encouraging news, it is but one small step. Investors will need convincing that Per Una is bringing in new customers, not simply cannibalizing sales from other M&S product ranges. M&S has a lot of catching up to do – reversing the decline will be a long-term process. Furthermore, M&S must improve its assessment of demand. It is not only embarrassing but bad business to be caught short.

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