IT IS the sort of New Year hangover from a poor Christmas that Marks & Spencer boss Marc Bolland could have done without.
David Cumming, head of equities at Standard Life Investments (SLI), turned the screw on the M&S chief executive yesterday by questioning his leadership, not just after a poor festive period for the key general merchandise division, but also after several years in the hot seat without reaching the nirvana of a trading renaissance.
M&S revealed last week that non-food sales fell 5.8 per cent over the Christmas period, as well as the company encountering problems with its online distribution centre in Castle Donington at the worst possible time of the year. The warm autumn weather also didn’t help clothes sales, even though food held up well.
Edinburgh-based SLI’s Cumming told BBC Radio: “Marc Bolland’s been there for five years and over that period profits have actually fallen despite £2.5 billion of capex [capital expenditure], so I think the chairman and senior independent director at M&S are probably asking themselves whether his scorecard is acceptable, and they should be asking M&S shareholders the same question.”
Bolland was not helped by the Christmas synchronicity of a strong trading performance from fashion rival Next and also a rather dynamic announcement from a previously floundering Tesco under its new chief executive, Dave Lewis, who is just a matter of months into the job.
I believe, like some M&S investors who are not quite as disenchanted with him, that Bolland still has some slack. The autumn womenswear ranges were well received, profit margins are receiving attention, the overseas footprint is more logical.
You could argue the M&S boss has been unlucky in being hit by online problems and unseasonal weather in the highest-profile time of the year for retailers.
But it would be disingenuous to say he is not now under pressure, and probably just has two main announcements left through which to belatedly restore faith – the full-year results early this summer and the interim results in the autumn.
Bolland took over from Sir Stuart – now Lord – Rose in the summer of 2010, and there will be something highly symbolic about that five-year milestone being reached without tangible signs of a general merchandise turnaround.
The long-term resilient performance of the food business also won’t come to the rescue, as investors now largely take that as read, and are still looking towards the touchstone of clothing sales – an area of the business that is now in the 14th consecutive quarter of decline.
There is still a fair deal for Bolland to play for, but the clock is now a factor.
Square Mile salaries are in a different world
INFLATION-linked pay is for losers. A harsh and offensive over-simplification, but one wonders whether at the more feral end of the City if it is not what passes as an article of faith.
The thought occurs at the news that workers who found new jobs in the City during 2014 got an average 18 per cent salary rise. Inflation is expected to be well below 1 per cent when the latest data comes out today.
The headhunters say the rises are a function of the market, with increased demand as the economy continues to recover – some 4,620 jobs were created in London’s financial services industry in December, according to the Morgan McKinley London Employment Monitor. Break open the Bolly!