Marks & Spencer rests its case: Its performance isn’t bad at all


James Moore
Wednesday 09 July 2014 13:13

Outlook There’s a trick that some defence lawyers like to use: however strong the evidence of the client’s guilt, deny, deny, deny. It doesn’t matter if the bad guy was caught on film with a gun in his hand and a bag labelled “swag” while demanding the teller fill it with cash. He didn’t do it. He didn’t. He didn’t do it!

Marks & Spencer’s chief executive, Marc Bolland, has clearly learnt a thing or two from defence lawyers because he was using a similar tactic with M&S’s trading statement.

Of course it wasn’t quite as blatant as deny, deny, deny. But when you see words such as “improvement” and “progress” liberally peppering a rather rotten performance update then you know what game is afoot.

The case for the prosecution isn’t very difficult to construct. General merchandise sales were down, and while clothing was just about ahead (by 0.1 per cent), that included new stores; without them, it too was down.

The company was finally trumpeting growth in womenswear, and womenswear is what M&S lives or dies by (increasingly, it’s the latter).

But remember, last year’s performance at this stage was dire, and that was following on from a dreadful 2012 when M&S famously blamed the rain for its woes.

This year, everything should have been ripe for a revival, the weather having (more or less) played fair. And yet against that favourable backdrop, and the weak comparatives, the best M&S could manage was 0.1 per cent.

It gets worse. Take food, which has been providing crumbs of comfort for M&S. “A great quarter,” Mr Bolland declared, pointing to headline growth of 4.2 per cent (1.7 per cent when only those stores open a year are included).

Very creditable. Until you read the (very) small print in the trading statement, which said: “Adjusting for impact of later Easter timing, total food sales were +2.6 per cent, like-for-like +0.1 per cent.” So not so great after all. And if the food business is coming off, M&S really is in trouble.

The biggest problem this time around was M&S’s online channel, through which sales tumbled by 8.1 per cent despite a much-heralded relaunch and claims that customers think it’s really, really great. So great, they won’t start buying more through the site until just before the crucial run-up to Christmas.

Given all that, you can understand why Mr Bolland, who’s been at it for nearly four years now, is resorting to the last, desperate, hope of the defence lawyer facing up to an all but unwinnable case. Deny, deny, deny. It’s the only tactic left open to him.

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