Bolland hails golden era at M&S even as profits slide
MARKS & Spencer chief executive Marc Bolland will this week hail a new era in his turnaround strategy despite a third year of sliding profits.
Bolland will outline plans to cut company spending by £200million a year over the next three years, arguing that key capital investment is complete.
Bolland has spent £2.2billion reshaping the business in the past three years, including creating a new website that cost £500million. The spending cuts could finally start to deliver higher profits, according to City analysts.
Bolland is also hoping the investments will improve sales, with stores opening abroad, more customers using its website and fewer – but bigger – warehouses.
Meanwhile, fashion boss Belinda Earl, whose team has now been in place for a year, said she expected to raise vital clothing sales.
But M&S is expected to say profit in the year to March fell to £615million from £665million a year earlier. Profits hit a record £1billion in 2008 under the stewardship of Sir Stuart Rose before the economic downturn took hold.
Shareholders are still looking for clear signs that the long-awaited recovery in the company’s clothing business has begun.
The division, which accounts for half of M&S’s forecast £10.3billion sales, is more profitable than food and is seen as key to a lasting turnround. In a note to clients, Deutsche Bank analysts talked of ‘two years of disappointment and continued market share losses’ in clothing.
Some critics fear M&S shoppers are being lost to John Lewis and Next.
This week will also see M&S miss its original three-year annual sales target by £1.2billion and even miss its scaled back targets announced in 2012 by £500million.