M&S feels pre-Christmas pressure

Herald Series: A discount day at Marks and Spencer spotlighted the store as retailers compete for a slice of a hoped-for shopping surge A discount day at Marks and Spencer spotlighted the store as retailers compete for a slice of a hoped-for shopping surge

A last-minute pre-Christmas discount day at Marks and Spencer has thrown the spotlight on the under-pressure store as retailers face a crucial weekend vying to capture a slice of a hoped-for shopping surge.

For many brands the festive period represents a make-or-break chance to turn around their fortunes at the end of a difficult year.

Retail bellwether M&S is under particular scrutiny as embattled boss Marc Bolland hopes for an improvement in the store's struggling womenswear division.

A "Mega Day" of 30% discounts across clothing tomorrow - prompted by competition from heavy promotion by rivals - has been greeted with dismay by some analysts.

Cantor Fitzgerald's Freddie George argued it would be difficult for M&S to make up sliding profit margins and has downgraded profit forecasts for the group.

He said anecdotal evidence suggested there had been an accelerating trend in the level of discounts on offer at M&S and that it is behind on its sales targets ahead of Christmas.

Analyst Nick Bubb said the "Mega Day" of discounts was likely to hurt the brand, irritating loyal customers who have paid full price in recent weeks.

"Whether it will turn out to be worth doing that in short-term, just to try to save the CEO's job, remains to be seen, but the M&S brand will suffer long-term damage."

Doubts about M&S among investors surfaced earlier this week when its rating was cut by analyst at UBS, sending shares falling.

The group's performance over the period will be carefully scrutinised when it publishes its latest trading update on January 9.

There will be intense scrutiny on the performance of the autumn/winter range that is being seen as the key indicator of the whether M&S's reshuffled fashion team is turning dismal clothing sales around.

Meanwhile, department store Debenhams was accused of "bully boy tactics" after it wrote to suppliers earlier this week demanding an 8% discount on goods.

A letter from finance director Simon Herrick set out the group's multimillion- pound outlay in opening and refurbishing stores and developing an online offering.

The suppliers were told: "As we will mutually benefit from the growth of Debenhams we are now seeking a contribution from our suppliers to support our commitment to on-going investment."

Latest official figures from the sector showed retail sales up by 0.3% in November, following an October when they fell by 0.9%. Experts said that it meant unless there was a sharp rebound in December, the fourth quarter would be relatively flat.

More recent figures from the CBI showed retail sales gaining momentum in the first part of December.

Latest numbers from the New West End Company, representing 600 retailers across Bond Street, Oxford Street, and Regent Street, reported footfall 7.4% higher from Monday to Wednesday compared with the week before.

The company said footfall was down 9.8% year-on-year but were hopeful of a dash for the shops now the deadline for guaranteed online delivery before Christmas had passed.

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