M&S sales dragged down by website troubles

Marc Bolland is the focus of media attention as he leaves yesterdays AGM. Picture: Getty

With chief executive Marc Bolland facing disgruntled shareholders at the retailer’s annual meeting today, the group said online sales tumbled 8.1 per cent in the first three months of its new financial year as shoppers battled with registration and navigation issues.

The site, launched in February, is a key part of the firm’s plans to become an international retailer reaching customers through stores, the internet and mobile devices, but analysts said its performance has been “pretty mediocre”.

In a trading update ahead of the shareholder meeting, M&S said its website was “technically resilient”, but the changeover contributed to a 1.5 per cent fall in like-for-like sales of general merchandise during the 13 weeks to 28 June.

Clothing sales were down 0.6 per cent compared with a year earlier, but womenswear sales were “slightly higher” and food grew 1.7 per cent.

The chain is simplifying parts of its website, which currently has 3.2 million users, and expects the online arm to be growing again by the retailer’s peak trading period which begins in November. It plans to register six million users by the end of the year, which was the number the firm’s old website carried.

Bolland said: “We have seen a continued improvement in clothing, although as anticipated the settling in of the new M&S.com site has had an impact on sales.”

Some analysts were surprised that, given the troubled start to the site, M&S’s online executive director Laura Wade-Gery was last week promoted to take charge of its 800 UK high street stores.

Shore Capital said the performance had been “pretty mediocre” and that Wade-Gery’s time might be “more effectively spent sorting out dot com”.

Profits at M&S have fallen for three years in a row and have been overtaken by rival Next, although the group, which began life as a Leeds market stall in 1884, is on track to meet City forecasts for a pre-tax profit of £663 million this year, up from £623m last time.

One private shareholder told the board at today’s packed annual meeting: “This must be the slowest turnaround of a ship in history.”

Another accused the group of a lack of leadership, while a third said: “Let us see some improvement, rather than recurrent excuses.”

Despite the frustrations voiced by small investors, Bolland was re-elected as a director with just 4 per cent opposition. The group’s executive pay plans were backed by more than 99 per cent of shareholders.

M&S chairman Robert Swannell accepted that the general merchandise division had not come up to expectations but told shareholders that they would soon see improvements at the firm, adding: “We know we have to do more. We now have to deliver on the investment we’ve made.”

Tony Shiret, retail analyst at Espirito Santo, said: “Investors have to bear in mind how much has needed doing here and that there are bound to be some hitches along the way.

“At some point there will have to be some sign that the end is in sight for investors. But it is still too early for that.”