Bolland: Company is united on my plan for M&S profits
MARKS & Spencer chief executive Marc Bolland insisted this weekend that the company was united behind his strategy and pledged the group would recover from last week’s disastrous Christmas trading figures, amid growing impatience from the City over the ailing retailer’s performance.
The embattled M&S boss also said that he was aiming to focus more on healthy eating to boost sales at the struggling retailer.
‘Sometimes it’s a difficult job, but the things we are doing are right and I am very encouraged by the support of people around the company,’ he told The Mail on Sunday.
‘The company is completely unified behind this strategy. We are pulling the right levers and will certainly be able to improve on the performance we saw in December.’
His confident tone came despite a disastrous set of figures, which showed a slight rise in food sales, but also revealed a sharp fall in clothing sales (down 5.8 per cent) and a 5.9 per cent decline in online sales against a backdrop of rocketing internet trade at almost every other retailer. The internet sales fall was blamed on problems at the group’s distribution centre at Castle Donington in Leicestershire. But an unseasonably mild autumn and winter have also hit the group.
The performance attracted bitter criticism from David Buik at stockbroker Panmure Gordon, who said: ‘How much longer must the market and fund managers put up with the wave of excuses and false promises that life is getting better?’ Bolland insists increasing sales is less important than maintaining profits, adding: ‘We don’t want to be in supermarket territory with our fashion product. We want to improve quality and improve our styles. So we have taken a step to say this is not all about volume growth. This is about positioning the brand and getting more gross margin to make the business more profitable.’
For the past five years the City has appeared to back Bolland. Despite declining profits since his arrival in May 2010, the share price has increased by 22 per cent. That confidence, however, took a knock last week as shares fell 3.5 per cent on Thursday following the sales figures.
Bolland will use his fifth anniversary at M&S to issue a strategic update. Reflecting on the past five years, he noted that soon after he arrived, the Bank of England cut its economic forecast, adding: ‘The world has changed, the economy has changed, the customer mood has changed.’ Bolland insists the strategy now in place does not need a dramatic change, except for renewed emphasis on healthy eating ranges in the food division.
‘When I look at our food business I see two trends. People are more interested in high quality products but they are more interested in their health as well. So when people are looking at what disposable income they have, and where they want to put it, they want to see things that are high quality and health is going to play a big role,’ he said.
Many commentators have drawn parallels between Marks & Spencer and another embattled retailer, Tesco. In contrast with M&S, Tesco’s share price rocketed on Thursday after investors were impressed by the improvements new chief executive Dave Lewis had made in his four months at the business, though shares fell back sharply on Friday.
M&S has insisted its strategy is not a rescue operation like Tesco’s, but a transformation to build a company with a long-term future.
The question is how much time the market is prepared to allow Bolland to produce results.