An audience of 2,000 shareholders, double the previous year's attendance, packed into the Grosvenor House Hotel on Park Lane, in London, to hear the company explain the worst year in its history.
Though the mood was polite, shareholders queued up to criticise the struggling retailer for poor service, deteriorating product quality and for losing touch with its customers. "The company seems to have lost the plot," one said.
M&S had to put more seats in the auditorium to satisfy demand. The company's share register has increased by 50,000 to 368,000 in the past 12 months as small investors have piled in thinking such a strong high-street name must recover.
But a current trading update yesterday was interpreted as a near profit warning in the City with analysts scrambling to downgrade profit forecasts. M&S said UK sales were down by almost 10 per cent in the first 15 weeks of the year if new selling space is excluded. General merchandise sales fell by 13 per cent, with food sales down 3.4 per cent.
April and May trading had been in line with expectations, M&S said, but June was disappointing. The shares fell 11p to 377.5p. "The buying behind the summer ranges was cautious and this has led, in some cases, to problems of availability which contributed to the poor performance," the group said.
But some analysts said the way the figures had been calculated meant the actual performance may have been even worse. Nick Bubb, at SG Securities, said sales per square foot could be down by as much as 15 per cent. With costs rising, first-half profits will be under intense pressure. "The share price is being supported by takeover speculation and re-structure hopes,' Mr Bubb said. He added: "They are saying `wait for the autumn ranges' but we shall see. Last year consumers were prepared to wait for prices to come down. The brand has been damaged and people have lost a bit of faith."
SG Securities cut its forecast from pounds 725m to pounds 650m, while CSFB trimmed its number by 2 per cent to pounds 700m.
Brian Baldock, acting chairman, following the abrupt retirement of Sir Richard Greenbury last month, described last year's performance as "frankly unacceptable".
He outlined a host of improvements designed to restore the group's fortunes. These included a facelift for 125 stores with better layouts and product displays. Prices for the autumn clothing ranges will be down by around 5 per cent but with lots of new styles. There will be 2,000 more staff on the shop floor to improve customer service which has also been criticised.
Peter Salsbury, who won a bitter boardroom battle to become chief executive last year, said the company was doing the right things to restore its fortunes but that it would be a "long process".
One shareholder was not impressed. He said he had bought shares in M&S because his wife was always shopping there. But this was no longer the case. "My wife buys nothing from M&S now," he said, complaining that she did not like the "dreary sack-like dresses in dreary colours".
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