M&S staff bonus slashed despite £1bn profits
Marks & Spencer's annual profits topped £1 billion for the first time in a decade today, but staff failed to cash in after the retail giant slashed bonus payouts.
The company's 62,000 customer assistants - who gained up to £500 last time - will see payouts fall by half to a maximum of £250.
Chief executive Sir Stuart Rose - who received a total bonus of £2.6m last year - will gain no extra payout at all after the group missed internal targets, details of which were not disclosed.
M&S's staff pot of £16.8m is a fraction of last year's record £91 million windfall. Only head office staff working on the better-performing online and international operation will be in line for any payouts.
The gloom for staff came despite the best profit performance for ten years, although City analysts expect this to fall to around £925m next year in a darkening retail climate.
Collins Stewart's Rob Mann said: "Although the headline numbers will no doubt be taken positively, this set of results is delaying the inevitable."
Shares in M&S barely moved today despite the company beating market forecasts of £989m by £18m.
Sir Stuart - who has led the turnaround of the business since 2004 - said trading since the end of March had been "mixed", with sales suffering in April's downpours before recovering with better weather earlier this month.
The M&S chief remains cautious over consumer sentiment, although the group still intends to spend up to £900m on its stores this year.
The company said it now has more than 21 million customers shopping in its stores every week, 400,000 ahead of the previous year.
Sir Stuart added the earlier Easter and poor weather had led to volatile trading conditions, making it hard to pick underlying trends.
"We are all finding it very difficult to read the tea leaves," he added.
But he argued the company was well-placed to cope with a downturn, saying it was a "strong business in a weak market".
There were fears in the City over M&S's clothes sales after poor figures from rival Next, but the group cut prices to protect market share as well as extending the range of its Autograph collection.
Like-for-like sales among general merchandise - which includes clothing - fell 3.1 per cent in the first three months of the year, slightly better than most forecasts, although the earliest Easter for almost a century boosted the numbers.
Meanwhile food shoppers could soon be able to buy well known brands such as Marmite and Heinz tomato ketchup at M&S stores for the first time, after the group announced plans to trial the sale of around 350 branded products at 19 stores in Tyneside and Teesside from June.
The pilot forms part of plans to boost its food market share to 5 per cent. The plans also include another 70 Simply Food stores, expanding the range of products on offer, and selling better value everyday items. Like for like food sales fell 0.5 per cent in the fourth quarter.
The company has also identified £50 million in savings through reducing overheads and trimming marketing spending for the coming year, although Pali International analyst Nick Bubb remained doubtful over the firm's prospects.
He said: "M&S have found £50m of other cost savings, but they can't slash the staff bonus twice. The main driver of cost growth this year is the huge amount of new space (the company) is bringing on stream and there is not much that M&S can do to slow that down."
Sales from the M&S Direct online business rose 63 per cent last as the firm made progress towards its target of achieving £500m of sales by 2010/11.
International sales were up 16.8 per cent at £712.9m, with new stores opened in the Republic of Ireland, Taiwan, Lithuania, Serbia, Ukraine, Libya, Russia and Saudi Arabia, taking its global reach to 40 territories.
Overall the group has 622 UK stores and 278 international outlets.
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