MARKS & Spencer chief executive Marc Bolland secured some valuable breathing space yesterday after healthy food sales helped the high street stalwart eke out modest growth.
The M&S boss has been under pressure to revive a core clothing business, squeezed by the consumer downturn and competition from the likes of Debenhams, H&M and Next. The firm has also been the subject of renewed takeover speculation.
Shares closed 4.3 per cent higher at 400.4p after Bolland assured investors that a new fashion team had started to deliver improvements in terms of stock availability and management.
There was also relief that overall like-for-like sales had grown by 0.6 per cent in the latest quarter – the group’s strongest result in two years.
Sales of non-food products, spanning clothing, footwear and homewares, fell by 3.8 per cent, compared with the 4-6 per cent slide expected in the City. Food sales were 4 per cent up on a year ago.
David Cumming, head of equities at Standard Life Investments, said: “He [Bolland] has to get his autumn range right, that’s when the management changes that he has made will have an impact.
“I think the market will wait to see how that range is going to work. If that is poor, then he’ll be under a lot of pressure.”
Investec Securities analyst Bethany Hocking said: “We still have concerns about whether M&S’s clothing offer is becoming less relevant to its core shopper; this statement does show some signs of progress, however.”
James McGregor, director of retail consultancy Retail Remedy, added: “Judgment Day for Marc Bolland will come later this year.”
As part of his turnaround plans, Bolland has already appointed former M&S food boss John Dixon as head of general merchandise and drafted in former Debenhams and Jaeger boss Belinda Earl to revitalise M&S’s womenswear range.
Janie Schaffer, former Victoria’s Secret chief creative officer, was made director of lingerie and beauty last November. Finance director Alan Stewart said investors knew they had to be patient.
He said: “What we’re hearing directly from shareholders is that they are supportive of our strategy... and that they recognise it’s going to take time.
“From an executive perspective as well we are absolutely aligned on the strategy, we know what we’re doing and everybody is behind it.”
The group’s food division enjoyed a record Easter week, benefiting from a range of new products including Belgian chocolate mini hot-cross buns, of which it sold more than 600,000 packs.
Analysts expect overall group profits to be lower for the second year in a row when M&S reports later this spring.
This follows a grim 2011 for the group, when profits fell for the first time in three years, dipping 1 per cent to £705.9 million.