MARKS & SPENCER has suffered a further decline in its share of the childrenswear market — with the group now selling fewer children’s clothes than Woolworths.

Next, Asda, Tesco and Woolworths now have larger market shares than M&S, the troubled high-street icon, according to a report to be published this week by Verdict, the retail-research company.

The report also reveals that Next has consolidated its position as the market leader in the childrenswear market with a 11.3% market share. Asda, the second-largest childrenswear retailer, controls 8.1% of the market.

Richard Hyman, chairman of Verdict Research, said: “Having overtaken Marks & Spencer only in 2002, Next now controls well over double M&S’s market share, further highlighting the immense divergence in performance of the two largest clothing retailers.”

Next is due to announce interim results next Thursday. Retail analysts expect the group to announce pre-tax profits of about £160m for the first half of the year. But the City will be focused on the current trading update — with speculation that despite the success of its childrenswear, the group’s core women’s and men’s ranges have been hit hard by the high-street slowdown and unseasonable weather.

Over the past decade Next has partly benefited from the decline of M&S, but City analysts fear that the retailer will be hit hard if Stuart Rose, chief executive of M&S, manages to turn the group around.

Rose argued that having slowed the decline of its market share to 0.1% M&S had finally stemmed the loss of market share after five years of rapid decline.

“We have made inroads, but we cannot turn it round in 12 months. We have a long way to climb back,” he said.

Rose claimed that M&S was fighting back on quality, value and better styling. “We have sharpened our prices and set out our stall to sell quality merchandise,” he added.

It is just over a year since Rose and his board turned down an indicative 400p-a-share offer from Philip Green, the retail entrepreneur, and outlined a plan to revive fortunes at the group after years of mismanagement. Rose has returned cash to shareholders and refocused the group on its core business, but nevertheless shares in M&S closed last week at 353p.

In its report Verdict claims that childrenswear had emerged as the key battleground in the clothing market.

“Facing lower growth in their core clothing market, adults’ clothing specialists are adopting predatory tactics pushing into childrenswear,” said Hyman.

Alongside Next, said Hyman, Tesco has also seen big growth — with Verdict expecting the supermarket’s share of the market to increase by 1% in 2005.

Primark, the discount retailer owned by Associated British Foods, is also expected to gain market share in 2005 — closing the gap on M&S.

“Next, Primark and the like have proved unstoppable in grabbing an increasing market share. As a collective group they are decimating the childrenswear market,” said Hyman.

How the top five stack up in childrenswear

Retailer %

Next 11.3

Asda 8.1

Tesco 6.7

Woolworths 5.4

M&S 5.2

Times Recommends

• Minister in talks with Saudis to protect creditors
• Premier Inn hits back in £29-a-room row
• Bankers hit back at 'populist' bonus supertax