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
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

Ashdown Group: Training Programme Manager - City, London

£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

Day In a Page

Where the spooks get their coffee fix: The busiest Starbucks in the US is also the most secretive

The secret CIA Starbucks

The coffee shop is deep inside the agency's forested Virginia compound
Revealed: How the Establishment closed ranks over fallout from Loch Ness Monster 'sighting'

How the Establishment closed ranks over fallout from Nessie 'sighting'

The Natural History Museum's chief scientist was dismissed for declaring he had found the monster
One million Britons using food banks, according to Trussell Trust

One million Britons using food banks

Huge surge in number of families dependent on emergency food aid
Excavation at Italian cafe to fix rising damp unearths 2,500 years of history in 3,000 amazing objects

2,500 years of history in 3,000 amazing objects

Excavation at Italian cafe to fix rising damp unearths trove
The Hubble Space Telescope's amazing journey, 25 years on

The Hubble Space Telescope's amazing journey 25 years on

The space telescope was seen as a costly flop on its first release
Did Conservative peer Lord Ashcroft quit the House of Lords to become a non-dom?

Did Lord Ashcroft quit the House of Lords to become a non-dom?

A document seen by The Independent shows that a week after he resigned from the Lords he sold 350,000 shares in an American company - netting him $11.2m
Apple's ethnic emojis are being used to make racist comments on social media

Ethnic emojis used in racist comments

They were intended to promote harmony, but have achieved the opposite
Sir Kenneth Branagh interview: 'My bones are in the theatre'

Sir Kenneth Branagh: 'My bones are in the theatre'

The actor-turned-director’s new company will stage five plays from October – including works by Shakespeare and John Osborne
The sloth is now the face (and furry body) of three big advertising campaigns

The sloth is the face of three ad campaigns

Priya Elan discovers why slow and sleepy wins the race for brands in need of a new image
How to run a restaurant: As two newbies discovered, there's more to it than good food

How to run a restaurant

As two newbies discovered, there's more to it than good food
Record Store Day: Remembering an era when buying and selling discs were labours of love

Record Store Day: The vinyl countdown

For Lois Pryce, working in a record shop was a dream job - until the bean counters ruined it
Usher, Mary J Blige and Will.i.am to give free concert as part of the Global Poverty Project

Mary J Blige and Will.i.am to give free concert

The concert in Washington is part of the Global Citizen project, which aims to encourage young people to donate to charity
10 best tote bags

Accessorise with a stylish shopper this spring: 10 best tote bags

We find carriers with room for all your essentials (and a bit more)
Paul Scholes column: I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England

Paul Scholes column

I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England
Jessica Ennis-Hill: 'I just want to give it my best shot'

Jessica Ennis-Hill: 'I just want to give it my best shot'

The heptathlete has gone from the toast of the nation to being a sleep-deprived mum - but she’s ready to compete again. She just doesn't know how well she'll do...