Marks and Spencer chief executive Marc Bolland has come under increasing pressure as investors questioned his leadership after a disastrous Christmas for its clothing and gifts division and the meltdown of its £200 million distribution centre.
David Cumming, head of equities at Standard Life, which has a stake in the retailer, claimed that Bolland had spent huge amounts of cash on the business but with little return.
“Marc Bolland’s been there for five years and over that period profits have actually fallen despite £2.5 billion of capex, so I think the chairman and senior independent director at M&S are probably asking themselves whether his scorecard is acceptable and they should be asking M&S shareholders the same question,” he told Radio 4’s Today programme.
“I think M&S has got a lot of potential but that has not been demonstrated by results.”
His comments come less than a week after M&S revealed non-food sales over Christmas fell by 5.8% and were hampered in December as its state-of-the-art distribution centre in Castle Donington was unable to keep up with orders.
Another major shareholder told the Standard: “The company had started to show signs of improvement when it reported its half-year results in November, so I’m not sure people need to be baying for his blood just yet, but Bolland’s under real pressure again after last week’s update.
“The problems in Castle Donington are much more of a concern for Bolland [than unseasonable weather] because he’s spent time trying to improve its distribution. If he stays, the next set of results will be crucial and he’ll need to show that the Christmas trading period was just a blip.”
The shares today fell 1.3p to 446.7p.
Bolland has spent several years updating and upgrading much of the retailer’s ageing infrastructure at vast cost.
However, last week was the 14th consecutive quarterly fall in non-food sales.
He is now focusing on boosting margins to improve falling profits and has hired supplier gurus the Lindsey brothers to improve its distribution.
New buying teams and in-house stylists have also been hired. However, hundreds of customers faced problems with deliveries throughout December.
Bolland admitted it had been disappointing but insisted the problems had been solved.
The Dutchman’s counterpart at Tesco, chief executive Dave Lewis, continued to swing the axe today, revealing it will close 13 stores in Hungary to “secure the long-term future and profitability” of the operation.
It has been in Hungary since 1995 and has more than 200 stores.