UK: Pressure mounts on M&S boss Marc Bolland after fall in Christmas sales
09:07 10 January 2013
PRESSURE on Marks & Spencer boss Marc Bolland intensified today as the City punished the chain for a dismal performance in clothing during the key Christmas period.
M&S shares opened 4% lower following the company’s disclosure last night that like-for-like sales fell by 1.8% in the UK in the 13 weeks to December 29, including a bigger-than-expected slump in general merchandise of 3.8%.
The figures had been due for release this morning but the announcement was brought forward following a leak.
Mr Bolland admitted that trading in non-food was not yet satisfactory but pointed out that the group had decided to protect margins by reducing the level of promotions and keeping more stock at full prices.
He also said a new management team, which includes ex-Jaeger boss Belinda Earl, needed more time to address the turnaround plan, with their first collection for the autumn-winter season not due in the shops until July.
M&S produced a better-than-expected performance in its food business, where sales were up 0.3% on a like-for-like basis.
The group said the launch of more than 700 new products helped it to achieve record sales of almost £330million in the two key Christmas trading weeks.
However, City analysts said time was running out for Mr Bolland to show signs of trading improvement in clothing, particularly given the amount of money being spent on improving the company’s stores.
Shore Capital analyst Clive Black said: “It is clear that pressure is rising on the new management with respect to the nature and performance of forthcoming spring and summer clothing ranges at M&S in the UK, and an improvement in relative and absolute terms is necessary for shareholders’ confidence to be bolstered.”
Seymour Pierce said it planned to cut £10 million from its forecast for profits in the year to April to £645 million, a figure which compares with the £1 billion-plus achieved by the chain in the 2008 financial year.
The results come in contrast to other retail giants Next and John Lewis, which reported strong sales growth over the Christmas period.
Mr Bolland, who took over as chief executive in 2010, said it had been a “challenging and highly promotional” general merchandise market.
M&S said its free next day store collection initiative helped push online sales up 10.8% over the festive period, with sales from mobile phones and tablet computers up 90%.
But the group said it was cautious about the year ahead and it expected to see continued pressure on consumers’ disposable incomes.