Weather hits M&S first-quarter sales
United faces double tax bill if it moves to Cayman Islands
THE RECENT poor weather has dampened clothing sales at Marks & Spencer, the retailer is set to reveal this week.
It is forecast to report a 6.7 per cent fall in like-forlike sales of general merchandise for the first quarter, marking its worst quarterly trading update for three years. On the same day, chief executive Marc Bolland faces a shareholder vote on remuneration.
Jon Copestake, retail analyst at the Economist Intelligence Unit, said: “The economic downturn is a huge factor in M&S’s poor performance but it would have expected a bigger bump from the Jubilee. But the weather has been poor and consumer spending is still in the doldrums.
“While M&S has shifted its focus to food, which is reflected in the small sales growth, it has devalued its clothing brands somewhat.”
City analysts forecast that food sales for the quarter have held up, growing at 0.8 per cent.
At this week’s AGM, Bolland is expected to face a barrage of questions from shareholders regarding the company’s performance and his pay packet.
In May, M&S posted its first profit drop in three years with underlying pre-tax profit of £706 million, down from £714 million last year.
Copestake said: “The performance of Marc Bolland is likely to be called into question at the AGM and the spotlight will also fall on his salary and bonus, given the company’s poor performance.”
M&S’s remuneration report, released last month, showed Bolland’s total pay and bonus package stood at just less than £1.7 million last year. On top of his £975,000 basic salary the Dutchman was awarded a bonus of £663,000 and shareholders will this week vote on whether to rubber stamp the report.
A spokeswoman for M&S said: “M&S is in constant dialogue with its shareholders regarding remuneration. We made a number of changes based on these discussions last year and we are not anticipating any problems with the vote this year.”
However, last month, corporate governance lobby group Pensions Investment Research Consultants recommended that M&S investors abstain from voting on the retailer’s remuneration report, warning of the potential for excessive payouts.
Copestake added: “Regardless of whether shareholders vote down the remuneration report or not, Bolland’s salary, bonus and perks will be pushed into the public eye.
“The size of his salary and bonus reflect a buoyant business, which M&S isn’t at the moment.”
Industry experts also believe that the departure of Kate Bostock, the head of M&S’s non-food business, could be confirmed this week.
GEOFF HO