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Comment: Bolland approaches tipping point at M&S

Martin Flangan

Martin Flangan

  • by MARTIN FLANAGAN
 

MARKS and Spencer chief executive Marc Bolland will unveil a fall in profits for the third year running today, as garish price promotions dominate the high street, and M&S is squeezed between the demotic plunderings of Primark and the sleek inroads of Next. No pressure, then.

The market consensus is for the high street bellwether to post a profit of £615 million, well down on the previous year’s profit of £665m, which in itself was the lowest since the 2009 recession.

To rub salt in, the much younger Next – a child of the overt consumption 1980s – overtook Bolland’s company in profitablity for the first time recently.

Much done, much still to do, as the old New Labour party used to say. The boss has three things going for him. A recent trading update showed that same-floorspace clothing sales had risen – even if only by 0.6 per cent – for the first time in a long while. Second, its food business has for some time been the jewel in the crown, regularly performing well despite its higher price position in tough consumer markets.

In some ways the divison seems to have mastered the art of people doing their main food shop elsewhere, while topping up with M&S higher- margin goodies for treats and sandwich lunches.

How Bolland must fervently wish the group’s key womenswear arm, which he has said shows “signal signs of improvement”, increases the pace of the recovery, and, in turn, drives up returns in the near-ish future.

Third, Bolland, who took over from Sir Stuart Rose in 2010, has an emollient presentational style which stays the right side of blandness.

As a result, hubris never enters the equation, comments are measured, and the City tends to cut him slack. But we are now surely at the tipping point.

The City is not demanding shoot-the-lights-out progress. But it will want to see steady, incremental sales improvements from here on in, as well as better profit margins.

And any setback along the way will meet a chilly response. Bolland’s tenure has seen store revamps, a sharpening of the move into internet selling, and a more coherent presence overseas. Now everyone is looking for persistently better numbers to vindicate the strategy.

Fizz goes out of Pfizer/AstraZeneca potion

Americans have a slang saying called “taking a powder”. It means to depart quickly. US drugs giant Pfizer has been encouraged to do so following its unwelcome bid to acquire Britain’s AstraZeneca.

Astra has rejected a final offer which always looked a research and tax cutting move.

Pfizer’s fate is deserved.

 

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