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.