Marks & Spencer is in the throes of a shake-up of senior management as results disappoint
If the Marks & Spencer chief executive is a pop fan, he might well have been humming that 1970s classic Give Me Just a Little More Time as he did the rounds of City analysts, financial press and broadcasters yesterday with a sorry tale of falling sales and lower profits.
Dutch-born Marc Bolland moved into the M&S hot-seat in May 2010 – and this is the second consecutive year of decline suffered by Britain’s largest clothing retailer. The economic environment hasn’t been easy, of course, although that doesn’t appear to have affected Primark, which trades in Ireland as Penney’s, and which had a very different tale to tell.
While M&S sales went into reverse, Primark posted a 15 per cent jump in both sales and profits. Even stripping out the contribution from new stores, its sales in the UK were up by 3 per cent for the full year. That compares with a 1.8 per cent drop in non-food sales at M&S in the second quarter, after a near 7 per cent decline in the first.
Most of M&S’s problems have been self-inflicted and, to be fair to Bolland, he inherited a tricky legacy of the group’s woeful underinvestment in multichannel retailing.
One of its biggest blunders earlier this year was its failure to stock sufficient quantities of some of its best-selling lines, particularly those featured in its glossy TV adverts.
Customers who couldn’t get their hands on the knitwear, jackets and ballet pumps modelled by the likes of Myleene Klass and Twiggy earlier this year simply went elsewhere to shop.
Those deemed responsible have paid the price in a shake-up of senior management in the core general merchandise division – head of clothing Kate Bostock departed after the dire first-quarter results in July, replaced by food boss and M&S veteran John Dixon. The former Debenhams chief executive Belinda Earl was also brought in to fill the new post of style director.
And the management changes are continuing. On Monday, as it put the finishing touches to yesterday’s results statement, M&S revealed it had poached Janie Shaffer from the US chain Victoria’s Secret to head up its important lingerie business. Shaffer, known in the tabloids as “the Knicker Queen”, certainly has the right credentials – before she joined Victoria’s Secret, she co-founded and ran the Knickerbox retail chain.
A cynic might think the announcement of further management changes in clothing was timed to do exactly as the band Chairmen of the Board urged all those years ago – to give Bolland a little more time as he faced the City with another set of poor sales figures. After all, who could realistically expect the new team to have much of an impact this year?
The M&S chief executive is now promising results from the latest infusion of retail talent by next summer. As the second quarter sales figures weren’t quite as dire as some had feared, and the shares have been buoyed in recent months by vague takeover speculation, the City looks minded to give Bolland and his team a little longer to restore the fortunes of the grand old lady of the High Street.
Like other retail bosses, Bolland is cautious on the next couple of months, warning that Christmas trading will be “volatile”, but there are at least some encouraging signs in the ailing clothing operation, and some evidence of a return of confidence for the battered buying team: Bolland proudly reeled off sales figures yesterday for one of this season’s hottest trends, military-style coats, saying M&S has already shifted more than 40,000 of them – and has plenty more in stock.
The food side of the group, as stylish as clothing is frumpy, continues to impress – second quarter sales rose by 1.6 per cent like-for-like, helping to offset the non-food decline.
There have also been some encouraging results from M&S’s huge investment in multichannel retailing. Its new state-of-the-art store in Cheshire Oaks, where shop assistants are armed with iPads and customers enjoy free wifi and touchscreen ordering systems, is turning in sales some 30 per cent ahead of expectations. And, from virtually a standing start, M&S says it now sells more than one in three of its dresses and one in five of its suits online.
All of which adds up to a stay of execution for Bolland. He’ll be allowed to let the new team do their work and may even be given the benefit of the doubt if this Christmas turns out to be another turkey (although he should check the schedules to make sure M&S doesn’t report on the same day as Primark again). It’s pretty clear though that if Bolland fails to produce the goods – and convincingly – by this time next year, his time will finally be up.
Fiona Walsh writes for the Guardian newspaper in London
