M&S and Next fight back

MIXED BAG

M&S, which also sells food and homewares, reported a 0.5 percent fall in second-quarter underlying UK sales in September, its best quarterly outcome for two years, and raised full-year profit expectations.

But it disappointed investors earlier this month with a plan to achieve 250 million pounds of savings a year by 2015-16, which some had hoped would be more ambitious.

That event provided an opportunity for internal candidates looking to succeed Stuart Rose as chief executive next year to set out their stall. But their presentations left many analysts cold, and worried about management succession as a growing list of external candidates rule themselves out.

M&S is also working on its triennial pension valuation, though this is not expected to be ready in time for Wednesday.

Charles Stanley analysts think this will show the pension deficit soaring to about 1.3 billion pounds as of March 31, compared with a shortfall of just over 700 million in 2006.

March was the low-point of the stock market slide, however, and they do not expect M&S will have to step up contributions.

Most analysts expect Next to report a fall in underlying sales at its shops for the third-quarter ending October, as recent warm weather offsets weak comparative figures.

UBS, Exane and BofA-Merrill Lynch see declines of between 3.5 percent and 4 percent.

Shore Capital, however, believes a rise is possible in the light of the weak comparative figures and a 2.5 percent decline over the first half of the year.