British clothing colossus NEXT (LSE: NXT) stoked fears across the retail earlier this week when it downgraded its profit estimates for the 
full year. The company has seen unseasonably warm weather damage demand for its winter clothing during September and October, causing total third-quarter sales to rise just 5.4%, falling well short of the company’s 10% target.
And today Supergroup (LSE: SGP) followed the trend by revising down its own bottom-line forecasts due to the same climate issues. Worryingly the firm warned that “warm weather across the UK and the rest of Europe… is expected to continue into November,” creating massive uncertainty over its autumn and winter ranges.
Of course clothing sales at Marks and Spencer (LSE: MKS) are also expected to suffer from the current mild weather. Still, in my opinion these problems are likely to represent a mere blip in the company’s compelling investment case.
Clothing lines back in fashion
Firstly, Marks and Spencer’s latest interims in July revealed that its beleaguered Womenswear finally returned to growth during April-June.
The company has long been dragged down by accusations of creating ‘frumpy’ and ‘dated’ fashion lines, but under the guidance of recently-installed style director Belinda Earl the firm may be turning the corner — indeed, total clothing sales rose 0.1% in the quarter despite crippling operational problems at its M&S.com website.
In addition to this, M&S is also witnessing surging growth at its Food division, benefitting from the increasing fragmentation of the British grocery market. Like-for-like sales rose 1.7% during the first quarter, and is embarking on an extensive expansion plan — with 150 new Simply Food stores being opened in the next three years — to latch onto this trend.
And further afield, Marks and Spencer’s reputation as a high-quality British fashion institution is proving a hit in foreign climes, particularly in the lucrative growth markets of Asia. Success here helped thrust international sales 4.7% higher during the quarter, boosted by the firm’s multi-channel approach through directly-owned and franchise stores and rapidly-expanding online presence.
Stick a bargain in your basket
On the back of these factors, City analysts expect growth at ‘Marks and Sparks’ to rev steadily higher in the coming years, following on from last year’s modest 1% advance. The retailer is expected to punch growth to the tune of 3% in the year concluding March 2015, with an extra 9% rise forecast for the following 12-month period.
And these estimates make Marks and Spencer an attractive value selection in my opinion, with the retailer changing hands on P/E ratings of 12.2 and 11.2 for 2015 and 2016 correspondingly. These figures fall comfortably within the benchmark of 15 or under which represents decent bang for your buck.
