By James Davey and Mark Potter

LONDON (Reuters) - Marks & Spencer (MKS.L) and luxury goods group Burberry (BRBY.L) are both expected to post sharp falls in profit on Tuesday 19 May, highlighting the impact of recession on both the middle and premium markets.

Burberry publicity campaign 2009

M&S, the UK's biggest clothing retailer, is expected to report annual pretax profit of 558 million to 620 million pounds for the year to March 31, according to a company poll of 34 analysts

The consensus forecast is 603 million pounds, down 40 percent on the 1.0 billion pounds posted in the previous year.

Analysts also expect M&S' total dividend payout to be cut to a consensus 17.4 pence, down 23 percent, just 12 months after it was raised 23 percent to 22.5 pence.

In March, M&S posted a smaller-than-expected fall in fourth-quarter sales, raising hopes it was getting to grips with its problems in both clothing and food despite the tough trading environment.

Many retailers have been struggling as shoppers cut spending amid rising unemployment, sliding house prices and fears of a long recession.

However, some UK retailers, such as fashion and homewares group Next Plc (NXT.L) and floorings group Carpetright (CATVU.L) reckon the market may have bottomed out.

M&S will not issue any current trading numbers on Tuesday but will provide guidance for the 2009/10 financial year.

Shares in M&S have lost 18 percent of their value over the last year but have risen 21 percent over the last three months on recovery hopes, outperforming the DJ Stoxx European retail index .SXRP by 19 percent.

LUXURY FEELS THE PAIN TOO

Burberry is set to post a 13.5 percent fall in adjusted pretax profit to 173 million pounds for the year ended March 31, according to a company poll of analysts.

The 153-year-old maker of raincoats and handbags said last month second-half revenue rose 2 percent to 663 million at constant exchange rates, down from 13 percent in the first-half and implying a drop in the fourth quarter.

The firm, known for its camel, red and black check pattern, said discounting had hit profit margins. But it has also cut stock levels and announced a 50- million-pound cost reduction plan in January which it has said will underpin 2009-10 profits.

Burberry said last month that profit before tax and one-off items would be around the middle of analysts' forecast range of 162 million to 185 million pounds and forecast a 25 percent drop in wholesale revenues for the first half of its 2009-10 financial year as department store customers slash orders.

Burberry shares dropped as much as 70 percent last year as the global recession took hold, but have bounced from a November low of 154.75 pence on a better-than-expected sales performance, cost cutting and, more recently, hopes for recovery.

(Editing by David Cowell)