Marks & Spencer annual profits fall again adding pressure on Marc Bolland to re-think strategy

Clothing like-for-like sales fell by 1.4% but food improved by 1.7%

Problems with a revamped website and a lack of detail about future shareholder returns added to the woes of the Marks & Spencer boss Marc Bolland, as he unveiled a third straight drop in annual profits yesterday.

The results marked the culmination of his three-year strategy to turn M&S profits around. However, Mr Bolland claimed that investors were behind his turnaround strategy, even though shares in the high street giant fell 5p to 446p.

M&S revealed a 3.9 per cent drop in underlying pre-tax profits to £623m in the year to the end of March, and while this was better than feared, the shares dropped amid worries over margins in its clothing business, glitches in its website and the lack of clarity on investor returns.

“All stakeholders signed up to this strategy and it is now about delivering,” said Mr Bolland. “We are on target.”

Across UK stores that have been open a year, its poorly performing clothing and homeware business suffered a 1.4 per cent fall in sales and dragged down overall growth to just 0.2 per cent. M&S’s food business performed far better, with sales increasing by 1.7 per cent.

Overall group sales were up 2.7 per cent to £10.3bn – below the target set by Mr Bolland two years ago.

M&S has faced intensifying competition both on the high street and online. Its annual profit dropped below that of rival Next.

The company said it will “take four to six months for the new website to settle”, which could mean that its clothing business, where womenswear sales are flagging, will be hit further in the current year.

Questions about Mr Bolland’s future were raised again but he avoided answering directly, saying only: “I really enjoy my role.” He added: “Three years ago, we recognised the scale of investment required to transform our business. There has been a lot of heavy lifting in the past three years.”

The company also said that none of its executives or staff would receive a bonus this year.

Tony Shiret, an analyst at Espirito Santo bank, said: “The comments on online are worrying, as we understand that the declines here have been material, and we are not sure that this is just a natural settling-down process or something more.”

Mr Bolland tried to focus investors’ minds on improved margins for clothing in the coming year and future cash returns to shareholders, but he failed to give further details and the dividend was unchanged at 17p.

Capital expenditure will fall to around £500m a year to fund future investor returns – down from about £800m. Mr Bolland said better sourcing for its clothing business will lead to improved margins and enable it to compete with “fast fashion” rivals.

He argued that the newly launched womenswear lines had been well received: “The fashion press embraces our direction.” Mr Bolland said it will take some time for the changes to show on the bottom line, but that the “company was more fit for purpose now”. Promotional and discount sales will be kept to a minimum, he added.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Tax Manager / Accountant

£35 - £50k DOE: Guru Careers: A Tax Manager / Accountant (ACA / CA / CTA) is n...

Ashdown Group: Contracts Executive - City of London

£35000 - £37000 per annum + benefits: Ashdown Group: Contracts Executive - Cit...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree Group have been well esta...

Recruitment Genius: Call Centre Debt Collector - Multiple Roles

£21000 per annum: Recruitment Genius: This is an exciting opportunity to join ...

Day In a Page

Giants Club: After wholesale butchery of Idi Amin's regime, Uganda’s giants flourish once again

Uganda's giants are flourishing once again

After the wholesale butchery of Idi Amin's regime, elephant populations are finally recovering
The London: After 350 years, the riddle of Britain's exploding fleet is finally solved

After 350 years, the riddle of Britain's exploding fleet is finally solved

Archaeologists will recover a crucial item from the wreck of the London which could help shed more light on what happened in the vessel's final seconds
Airbus has patented a jet that could fly from London to New York in one hour

Airbus has patented a jet that could fly from London to New York in one hour

The invention involves turbojets and ramjets - a type of jet engine - and a rocket motor
10 best sun creams for kids

10 best sun creams for kids

Protect delicate and sensitive skin with products specially formulated for little ones
Tate Sensorium: New exhibition at Tate Britain invites art lovers to taste, smell and hear art

Tate Sensorium

New exhibition at Tate Britain invites art lovers to taste, smell and hear art
Ashes 2015: Nice guy Steven Finn is making up for lost time – and quickly

Nice guy Finn is making up for lost time – and quickly

He was man-of-the-match in the third Test following his recall to the England side
Ashes 2015: Remember Ashton Agar? The No 11 that nearly toppled England

Remember Ashton Agar?

The No 11 that nearly toppled England
Turkey-Kurdish conflict: Obama's deal with Ankara is a betrayal of Syrian Kurds and may not even weaken Isis

US betrayal of old ally brings limited reward

Since the accord, the Turks have only waged war on Kurds while no US bomber has used Incirlik airbase, says Patrick Cockburn
VIPs gather for opening of second Suez Canal - but doubts linger over security

'A gift from Egypt to the rest of the world'

VIPs gather for opening of second Suez Canal - but is it really needed?
Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

Fashion editor, Alexander Fury, applauds a man who clearly has more important things on his mind
The male menopause and intimations of mortality

Aches, pains and an inkling of mortality

So the male menopause is real, they say, but what would the Victorians, 'old' at 30, think of that, asks DJ Taylor
Man Booker Prize 2015: Anna Smaill - How can I possibly be on the list with these writers I have idolised?

'How can I possibly be on the list with these writers I have idolised?'

Man Booker Prize nominee Anna Smaill on the rise of Kiwi lit
Bettany Hughes interview: The historian on how Socrates would have solved Greece's problems

Bettany Hughes interview

The historian on how Socrates would have solved Greece's problems
Art of the state: Pyongyang propaganda posters to be exhibited in China

Art of the state

Pyongyang propaganda posters to be exhibited in China
Mildreds and Vanilla Black have given vegetarian food a makeover in new cookbooks

Vegetarian food gets a makeover

Long-time vegetarian Holly Williams tries to recreate some of the inventive recipes in Mildreds and Vanilla Black's new cookbooks