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January 10, 2013 8:53 pm
Marc Bolland has come under renewed pressure over Marks and Spencer’s Christmas trading, with no end to the problems in clothing that have plagued the high street bellwether over the past year.
M&S’s clothing sales fell 3.8 per cent in the 13 weeks to December 29, worse than the most bearish forecasts of a 3.5 per cent decline.
Food was also sluggish, with a 0.3 per cent increase, against the most bearish forecast of a 0.5 per cent rise.
Mr Bolland says the general merchandise performance is “not yet satisfactory”, although he insists that the food performance was “stellar”.
The Financial Times reported last week that M&S experienced poor trading over Christmas and its sales and market share fell in the 24 weeks to November 25.
Mr Bolland says more shoppers are trading down from premium lines into lower-priced garments, which depressed the average selling price.
In addition, he says M&S has pursued a less promotional strategy. He estimates that it sold 7 per cent fewer goods on promotion in the third quarter than in the year-earlier period, while it had 5 per cent less clothing going into its sale.
That is despite a series of high-profile promotions, including discounts for staff and their families in a key weekend before Christmas, 15 per cent off all online orders for a set period and 30 per cent off nightwear in the final days before the holiday.
The mis-step over trading is the latest headache for Mr Bolland, who will have been chief executive for three years in May.
His tenure has also seen a disappointing homewares performance the previous Christmas, after he enlisted Dutch designer Marcel Wanders to create a range of home and gift items.
Mr Bolland also introduced new beauty departments. But people familiar with M&S’s trading said it cut down on traditional beauty gift sets and the new beauty strategy failed to take up the slack.
Mr Bolland insists beauty remains a small part of the business and is performing well. Overall, he says there are about 60 initiatives across the business, as part of his recovery plan, including a new electronic commerce distribution warehouse and a revamp of the online platform.
Tony Shiret, the independent retail analyst and long-term M&S watcher, says the key to a better performance is improving clothing, and this has not yet happened decisively.
“There have been plenty of things Marc has done already which should now be manifesting in a more solid performance,” he says.
Those include the relaunch of the core M&S Woman and M&S Man ranges, as well as efforts to revive its Per Una Italian-inspired collection.
Mr Bolland says the changes will take time to come through.
M&S parted company with Kate Bostock, the head of all of non-food business in July. She was succeeded by John Dixon who ran M&S’s food business.
The company also brought in Belinda Earl, the former chief executive of Jaeger, for two to three days a week. Throughout the autumn, Mr Bolland made a series of more junior appointments to beef up general merchandise, including womenswear. “If anyone would have expected this team to turn [it] around ... in six weeks, then everyone is dreaming in daylight,” Mr Bolland says.
The improvements should start to come through in July, when the autumn/winter collections start to be delivered into stores.
“The spring summer collection really looks promising. But the new collection that is now designed by the team for autumn/winter will be seen in July,” says Mr Bolland. “That means results will come after.”
The question is whether shareholders will continue to be patient after the Christmas performance.
One top 10 shareholder said he was giving Mr Bolland the benefit of the doubt. But he would need to deliver improvements in clothing by this time next year.
Alan Stewart, finance director, insists Mr Bolland has the support of the board and shareholders. One person familiar with the situation also insists that Mr Bolland has the “unequivocal” support of the board.
But long-term M&S watchers fear that the early release of M&S’s Christmas trading figures could herald a return to the boardroom tensions that have plagued the retail stalwart in the past.
Mr Bolland adds: “We have a very aligned board and management team.”
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