Marks & Spencer directors faced an angry shareholders meeting yesterday as the struggling retail giant announced a further steep fall in sales.
As almost 2,500 shareholders descended on the Royal Festival Hall in central London for the company's annual meeting, M&S reported falling sales in home furnishings as well as in its core clothing business. Only sales of food showed an improved performance.
In the 14 weeks to 7 July, like-for-like sales in clothing, footwear and gifts were down by 9.2 per cent on the same period in the previous year. The key womenswear division is thought to have seen sales plunge by 10-11 per cent as shoppers continued to shun M&S fashion ranges. Home furnishings sales fell by 1.5 per cent following a poor April. Food sales rose by 4.8 per cent.
M&S said it would invest £80m in a store refurbishment programme that will see two-thirds of its UK retail space given a makeover by Christmas. The group pinned hopes of a recovery on its new Autumn ranges, including the George Davies-designed Per Una collection, which will be in the stores in October. It also announced plans to create areas within stores featuring its "classic" range of clothes aimed at its core older customers.
The shares fell 0.5p to 248.5p despite the announcement that more efficient clothing buying had improved margins by three percentage points.
The comments came as Luc Vandevelde, the chairman and chief executive of M&S, was given a tough time by ordinary shareholders at the AGM. The most serious questions were reserved for the proposal to introduce a new executive share option package, which would increase the award of options to directors from 1.5 times salary to three times.
Dame Stella Rimington, the former head of MI5 who is now head of M&S's remuneration committee, said Mr Vandevelde would not participate in the new scheme. Earlier this year he also waived his right to a £742,000 bonus after a huge row over whether he had deserved it. But Ms Rimington later committed a gaffe when she admitted: "When I joined the board of M&S I can say that I didn't really understand share options."
Almost half the shareholders at the meeting voted against the new scheme, although proxy votes cast by institutions were 85 per cent in favour.
One shareholder scoffed at Mr Vandevelde's explanation that M&S needed to improve the scheme in order to attract and retain the best people. The shareholder said: "Let's not forget this [the original scheme] was only introduced last year to retain the best people and half of them have left the company already."
Mr Vandevelde, who joined the firm in February 2000, was asked whether he would "walk the plank" if he failed to deliver on his pledge to turn around M&S within two years. He said: "Given the magnitude of the problems, I would like to see this company through the recovery programme."
One private shareholder caused amusement when she asked directors to stand up if they had M&S clothing on. Three non-executive directors – Tony Ball of BSkyB, Sir Ralph Robins of Rolls-Royce and Sir Michael Perry, formerly of Unilever – did not get up.
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