Fashion faux pas dogging Bolland
M&S boss under pressure as clothing sales still floundering
MARKS & Spencer chief executive Marc Bolland will come under heightened pressure on Tuesday as disappointing f i rst- quarter clothing sales continue to thwart his turnaround.
The retail boss will also face disgruntled investors at the firm’s annual meeting at Wembley Stadium on the same day.
Many shareholders will be concerned that initiatives to kick-start growth in the crucial fashion division have failed to gain traction.
Britain’s biggest clothing retailer has warned previously that its transition to a new website would hit sales significantly for at least six months. Shoppers have had to re-register their details on the new site because the previous one was managed by Amazon.
Many customers are also unfamiliar with the new layout and it is normal for sales to dip temporarily as they find their way round.
Online sales account for 8pc or £800m of group sales.
Analysts expect sales in general merchandise, which includes home textiles, to drop 1.7pc, significantly more than the 0.6pc fall in the previous quarter. Then M&S took the unusual step of breaking out the specific sales of clothing, which were up 1.3pc.
But it is undecided whether it will do the same this quarter, which gives a strong indication that the past three months have not been good. This is despite drafting in a new team which has been working on ranges for more than a year.
It brought manufacturing of some of its faster fashion ranges closer to home and in March it launched its latest ‘Leading Ladies’ advertising campaign including Baroness Lawrence, mother of murdered teenager Stephen, among celebrities photographed by Annie Leibovitz.
Andrew Hughes, an analyst at UBS, said: ‘Weakness in online sales since the website relaunch in mid-February looks set to postpone the point at which non-food underlying sales turns positive.
‘Another delay will reinforce the perception of M&S as a business which promises much but is struggling to deliver.’
But Caroline Gulliver, an analyst at broker Jefferies, said: ‘We believe M&S could be at the start of a multi-year profit recovery. However, investors still require patience and nerve. With forecasts now cautiously set for 2015, management cannot afford to disappoint again.’
Clothing problems have dogged Bolland’s tenure.
His background has been in food and drink, having previously worked at Morrisons and Heineken. M&S has been criticised for out-of- fashion ranges while some items that did chime with loyal customers ran out of stock. The retail chief has also been fixing legacy issues with its warehouses and distribution which had been neglected by predecessor Sir Stuart Rose.
Its food division has fared much better and is expected to show growth of around 2pc, aided by the rollout of its Simply Food stores and a strong performance in the face of supermarket price wars.
Kate Calvert, an analyst at broker Investec, said: ‘The shift of Easter to the first quarter is likely to have offset the recent underlying decline seen in the wider food market. We forecast first-quarter food up 2pc, an improvement from 0.1pc.’
Bolland has said previously that the poor results would mean he and his senior directors and the firm’s 82,000 staff would not receive a bonus. His annual earnings fell by 26pc to £1.59m year- on-year because he failed to hit targets, according to the annual report.