Marks & Spencer shakes up top team as non-food sales fall
Tuesday 10 July 2012
Marks & Spencer's worst trading performance for three years triggered a boardroom casualty today after its womenswear range failed to strike a chord with shoppers.
The UK's biggest fashion retailer said sales of women's clothes had been hit by the wet weather and a shortage of some of its most popular lines, while it admitted to analysts it was losing market share.
That drove a 6.8% fall in non-food like-for-like sales in the 13 weeks to June 30 - its worst performance since December 2008.
Kate Bostock, who is head of general merchandise, will leave the group in October, while former Debenhams and Jaeger boss Belinda Earl has been tasked with revitalising the offer in the newly created role of style director.
While Marks avoided a shareholder rebellion at its annual meeting, some retail watchers said Ms Bostock had been made a scapegoat in order to take the heat off chief executive Marc Bolland.
Pressure has been mounting on the Dutchman to justify a pay packet that is potentially worth up to £6 million after he recently oversaw the retailer's first fall in profits for three years.
To make matters worse, M&S stock market value has at times recently slipped below rival Next, while online fashion store ASOS added to the strain by reporting a better-than-expected 8% rise in UK sales today.
Independent retail analyst Nick Bubb said: "M&S's problems in womenswear go far beyond the weather, as they are clearly losing market share.
"M&S desperately needs some stability in top management, but Marc Bolland is fighting for his own job so he has, somewhat predictably, made poor Kate Bostock, the head of M&S clothing, the scapegoat for the poor first quarter trading."
Ms Earl, who will work for the chain for two to three days a week, left Jaeger earlier this year after a period of sick leave.
The former Debenhams chief executive will work closely with John Dixon, who is currently in charge of food but will take over as head of general merchandise. He has been with the company for 26 years and is seen as a potential successor to Mr Bolland.
But Ms Earl may have a tough job ahead of her, as M&S's clothes have been criticised as frumpy and struggling to appeal to a younger audience, despite high profile adverts featuring the likes of Gary Barlow and Myleene Klass.
And today's figures will fuel fears that Marks, which has 700 stores in the UK, is losing its grip on the key womenswear market.
Seymour Pierce analyst Freddie George said: "Womenswear has been off trend and a rebranding exercise has not yet gained any traction.
"But I think they are generally doing the right things but it takes a while to get the message across to consumers."
Mr Bolland said the stock issues were a continuation of the problems it reported in April, when it did not buy enough of some of its best-selling lines and it could have sold more than double the number of pump shoes.
Marks said it is confident that it is taking the necessary steps to address the poor performance of its non-food business.
As well as the shake-up in the management team, it has improved buying and merchandising and believes its stock will be back on target in time for the autumn-winter season, which will be launched in stores later this month.
Sales of coats, jackets and hosiery have done well amid the grim early summer weather but the fall in sales of casualwear hurt it because it traditionally makes up a large proportion of its sales at this time of year.
The appointments were welcomed in the City, with shares up 2.5% despite the disappointing sales figures.
Meanwhile, food sales, which were boosted by the celebrations surrounding the Diamond Jubilee, rose 0.6%.
Overall like-for-like sales were 2.8% lower but this was the company's worst performance since the quarter to March 2009.
The group also said the roll-out of its new design of stores was on track, after it previously admitted its outlets were difficult to shop in.
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