Heat on M&S boss as results loom
Marks & Spencer boss Marc Bolland will come under more pressure tomorrow when the chain reveals another quarter of falling sales in its clothing division.
The update means the chief executive, appointed in May 2010, has overseen nearly three straight years of declining quarterly like-for-like sales in M&S’s general merchandise arm – which includes fashion as well as homewares.
Mr Bolland said there had been “encouraging signs” at the last trading update, covering the 13 weeks to December 28, despite a 2.1% fall in GM sales.
But a consensus average from six analysts forecasts a 1% fall in the latest quarter – though a seventh estimate, from Bernstein, predicts a much steeper 2.4% drop.
The continuing declines have come despite concerted attempts to turn around the retailer’s fortunes with new senior personnel and a celebrity marketing push.
At the last update, Mr Bolland blamed unseasonably warm weather for a sharp decline in October but said full-price sales were up in November and December. Sales improved by 0.5% over the eight weeks to Christmas Eve.
But the company warned that reductions in the run-up to Christmas would hit GM profit margins, prompting analysts to cut annual forecasts.
Most analysts expect underlying annual pre-tax profits to fall 6% to £623m when annual results are published on May 20.
It will mean the 130-year-old company being overtaken for the first time by rival Next – a relative upstart at 32 years old – which last month announced profits of £695m.
But management will be hoping a recent revamp of its website, which Mr Bolland has put at the heart of his plans for the business, will help it turn around its fortunes.
Meanwhile, there has also been a focus on global expansion with plans recently announced to open 250 stores over the next three years, with the aim of boosting international sales by a quarter and profits by 40%.
At the last trading update, Mr Bolland said that despite another poor performance for GM, there had been positive signs including small growth in market share for womenswear, while the spring/summer collection had been well received.
Yet analysts at Citi recently slashed GM forecasts on the back of industry figures showing a slowdown in the wider UK clothing market.
Experts from Bank of America Merrill Lynch said it expected M&S clothing sales were robust in January, but that womenswear had a more sluggish February while better weather in March diverted footfall outdoors.
They said the relaunched website looked much better, although they added the transition from the old platform may have disrupted customer traffic in early weeks after launch.
And while there was a “stellar” performance from the food division in the retailer’s previous quarter, with like-for-like sales up 1.6%, this is also expected to see a slowdown in growth to about 0.2%.
