AGM fashion show highlights new model for M&S

M&S chief executive Marc Bolland is putting his faith in the high street giants latest autumn collection. Picture: PA

The chief executive hailed a leap in online sales and said his plan to transform the British chain into “an international, multi-channel retailer” was making good progress.

But as he faced shareholders at the company’s annual meeting at Wembley Stadium, he admitted he was still not happy with the clothing division.

“I want to be very candid and honest that this is still unsatisfactory,” he said. “We’ve got a very clear plan in place to address it.”

The group said like-for-like sales of “general merchandise” in the UK declined by 1.6 per cent in the 13 weeks to 29 June, compared to the same period last year.

Figures from other divisions made lighter reading for investors. Food sales were up 1.8 per cent on a same-space basis, overseas stores saw an 8.7 per cent rise in takings and purchases from the firm’s website leapt by almost 30 per cent.

Bolland said: “Our general merchandise business showed some improvement this quarter and the food business delivered another excellent performance, continuing the strong underlying trend.

“Our international business also performed well during the quarter and M&S.com sales were very strong.”

The company said that its outlook remained cautious given challenging trading conditions. Bolland said that consumer optimism was steady rather than improving, though there had been a pick-up among older customers.

The retailer’s autumn clothing range, which has been well received by industry experts, will hit the shelves the end of this month, although the main marketing push will not begin until September.

Its launch is being seen as the key test for senior figures such as John Dixon, the new head of general merchandise brought over from the successful food division, and style director Belinda Earl, the former Jaeger and Debenhams boss. Analysts view the launch as a crucial test of the company’s ability to win back disgruntled customers.

Sheridan Admans, investment research manager at the Share Centre, said: “We continue to believe Marks & Spencer is tackling the problems in its women’s wear and general merchandise operations and recommend investors ‘buy’ as the retailer recovers. We believe that the new management and recent results indicate that there are more positive changes to come from the group.”

But Freddie George, a retail analyst at Cantor Fitzgerald, said M&S’ pre-tax profits had stagnated and clothing sales declined despite significant capital expenditure on refurbishing the stores.

“We do not see underlying earnings rebounding over the next two years despite the significant investment in multi-channel,” he said.

“The visual changes made to womenswear appear to be underwhelming to date despite the management changes in September.”