Marks & Spencer stands by strategy as investors rail at decline
Chief executive Marc Bolland said the new website had an "impact on sales" after posting a big drop in online sales
Tuesday 08 July 2014
Marks & Spencer’s chairman defended the chief executive Marc Bolland from a barrage of hostile shareholder questions, with the objects of the attacks ranging from the retailer’s lack of growth to the use of chilli in its spaghetti.
Robert Swannell admitted the company had lost its way and could learn from rival Next, whose profits recently overtook M&S’s for the first time.
His comments came as the company revealed the 12th consecutive quarterly sales decline at its key general merchandise division.
Problems with the retailer’s website were brushed aside, despite an 8.1 per cent fall in sales contributing to a 0.6 per cent fall in clothing and 1.5 per cent fall in general merchandise on an underlying basis.
Addressing shareholders at the annual meeting at Wembley Stadium, Mr Swannell said: “We are all clear on the strategy and believe we have a strong executive strategy led by Marc that we think will deliver it.”
He admitted that general merchandise sales had failed to meet expectations, but pointed to its rival for inspiration.
“We need to do a… step by boring step approach so we are consistent too. That’s what Next have done and why their shares have been one of the best performing in the sector.”
However, shareholders were not convinced. One investor said: “Every AGM… your promises have filled us full of confidence for the forthcoming year, only to return a year later full of disappointment. The share price is still languishing where it was over a decade ago. Why should we now believe that your ambitious plans will bear fruit this year? I think you’ve lost sight of the job of a retailer.”
Serious problems with the new, £150m website helped push like-for-like clothing sales down, and the latest decline underlines the challenge faced by M&S’s new UK retail chief, Laura Wade-Gery, who was promoted last week.
Mr Bolland insisted she was not leapfrogging the current food and general merchandise chiefs – Steve Rowe and John Dixon, respectively – and they would all report direct to him. He added that the decline in web sales was due to a “settling in” period, though he admitted that the site would not recover until Christmas. Analysts were scathing. Clive Black at Shore Capital said: “The dotcom fiasco leaves a bitter taste for investors, to our minds.”
M&S has struggled with encouraging customers to re-register with the new website. Mr Bolland said 3.2 million out of 6 million had moved across.
Among the difficult questions there were several lighter ones, with one shareholder asking for the Twiggy range to be available in stores, another asking for longer shirts to cover women’s stomachs better.
And despite a tough crowd, all resolutions passed.
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