News Column

M&S chief is under pressure amid continuing sales woes

July 9, 2014

SIMON BAIN; SIMON BAIN

MARKS & Spencer chief executive Marc Bolland has again run the gauntlet from small shareholders despite unveiling a small rise in sales of its flagship womenswear and a recent uptake in online trading.

At the group's annual meeting the former Morrison's boss, at the helm of M&S since 2010, insisted that his pound(s)2.3 billion of investment was starting to pay off despite settling-in problems with its new website.

But one private shareholder told a packed investor meeting in London: "This must be the slowest turnaround of a ship in history."

Regular AGM attendee John Farmer told the board: "Let us see some improvement, rather than recurrent excuses."

Mr Bolland's re-election was backed by 96 per cent of shareholders, but chairman Robert Swannell said: "We know we have to do more. We now have to deliver on the investment we've made."

Earlier M&S had unveiled a 12th successive sales fall in its general merchandise division, which includes its all-important womenswear offering, by a worse than expected 1.5 per cent.

Mr Bolland blamed the latest decline on a sales fall of 8.1 per cent on the group's relaunched pound(s)150 million website, but warned that turnover on the site would not recover until Christmas, which one analyst labelled a fiasco.

Like-for-like clothing sales were down 0.6 per cent, though overall sales were up 0.1 per cent.

The much-scrutinised womenswear was said to be slightly higher with no figure given.

Mr Bolland said: "We're actually very pleased.

"Even at a higher level of full price and a lower level of promotional [activity] we've been able to grow at womenswear and in clothing. We believe that step-by-step we are on the right track."

M&S's food business, which contributes more than half of group sales but less profit, is performing much better and delivered a 19th consecutive quarter of growth. Mr Bolland added "It is not an issue with the website.

"The conversion was expected to be lower because we brought a lot more content, but it is now a lot more inspiring. It's a journey and I'm pleased with the journey."

But analyst Neil Saunders at London-based retail research agency, Conlumino, called the figures "highly disappointing, especially since this part of the market is witnessing growth in double digits".

Clive Black, retail analyst at Shore Capital, said it had all the makings of a dotcom fiasco. He added: "It will still take a considerable amount of time for M&S to demonstrate that it can break the mould, grow its non-food offer, maintain market share and build earnings."

Mr Bolland is trying to address a legacy of under-investment, overseeing the redesign of products and stores and an overhaul of logistics to serve the new website.

However, a new clothing team he set up in 2012 has failed to deliver a sustained increase in sales and M&S profits were overtaken last year by those at rival Next.

The new website, launched in February, is a pillar of the intended transformation of the 130-year-old business into an international retailer reaching customers through stores, the internet, tablets and mobile devices.

M&S has 24 stores in Scotland and another 22 Simply Food outlets. Mr Bolland last week announced a shuffling of executive responsibilities, putting online boss Laura Wade-Gery in charge of UK retail, a move which sparked speculation the firm was putting succession in place.

Keith Bowman, equity analyst at brokers Hargreaves Lansdown, commented: "Against a backdrop of low expectation, M&S appears to have offered some hope.

"An increased focus on profit margin generates potential longer term optimism."

Shares closed down 5.8p, or 1.34 per cent, at 427.4p.


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Source: Herald, The (Scotland)


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