Marks & Spencer chief Bolland to defend strategy

Marc Bolland faces tough time at AGM with clothes sales expected to show further falls. Picture: PA
Marc Bolland faces tough time at AGM with clothes sales expected to show further falls. Picture: PA
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MARKS & Spencer chief executive Marc Bolland will defend his turnaround plans at this week’s annual general meeting amid an “underwhelming” performance from the high-street stalwart’s general merchandise business.

Shareholders will quiz the Dutch boss over the roll-out of his clothes ranges, which are designed to revive the FTSE 250 retailer’s fortunes.

M&S has enjoyed rising food sales in recent years as middle-class shoppers tuck into its popular dishes. But its clothing selections have fallen out of favour, with critics accusing the chain of abandoning its traditional middle-aged customers in favour of trying to chase younger shoppers.

Bolland will deliver a first-quarter trading update at the AGM, with a consensus of ten analysts expecting like-for-like general merchandise sales to be down by 1.5 per cent, marking the eighth consecutive quarter of falls. In contrast, like-for-like food sales are forecast to be up by 1.6 per cent.

Clive Black, an analyst at Shore Capital, said: “Operationally, the statement represents a staging post ahead of the introduction of the autumn-winter range over the next month or so.

“This is a range that is important as it represents the most tangible output to date of the work of executive director of general merchandise John Dixon and style director Belinda Earl.

“The fashion writers seem to have a broadly positive narrative on the new ranges but the key measure will be that of ‘Ms & Mrs Britain’.”

Bolland could also face questions over his pay package after his bonus increased by 
25 per cent to £829,000 despite M&S’s profits falling to their lowest level since 2009.

The Dutchman, who was drafted in as chief executive in 2010 to replace shareholder favourite Sir Stuart Rose, is credited with reviving the fortunes of grocer Morrisons, which he joined in 2006.

His turnaround plans for M&S’s clothing business were dealt a severe blow in April when Janie Schaffer – dubbed the “knicker queen” following her role in the launch of lingerie chain Knickerbox in 1986 – departed after only three months in her post as director of lingerie and beauty.

Schaffer was a former chief creative officer at American lingerie firm Victoria’s Secret and was hailed by Bolland as being at the heart of “a team that combines the best of M&S experience with exciting, new, external talent”.

Following her departure, Standard Life Investments chief executive David Cumming was among those who highlighted the pressure that is mounting on Bolland to get the clothing ranges right.

The Local Authority Pension Fund Forum, which in 2009 helped to force M&S to separate the roles of chairman and chief executive, has already thrown its support behind management.

Andrew Hughes, an analyst at UBS, thinks that Bolland is “on the right track” with his turnaround strategy.

“Although the non-food turnaround is taking longer than expected – and is not helped by poor weather 
and higher promotional activity – we believe that the strategic direction is right and will start to pay dividends over the next 12 months,” Hughes said.