M&S shareholders launch mini-revolt as sales falter

Marc Bolland is keen for stores to open for longer on Sundays. Picture: PA

It came as M&S’s hailed recovery was halted in its first trading quarter after its clothes and homewares sales slipped backwards again.

A total of 6 per cent of shareholders voted against the chief executive’s re-election, as the City also expressed disappointment that the group’s trading turnaround in the final quarter of its last financial year had not been maintained.

John Ibbotson, of retail consultancy Retail Vision, said: “While its all-important general merchandise results [dominated by clothing] are marginally better than expected, like-for-like sales have still declined against an easy comparative. However you dress this up, it’s still not good enough.”

M&S’s general merchandise like-for-like sales fell 0.4 per cent in the 13 weeks to 27 June, having risen 0.7 per cent in the previous three months, which ended 14 continuous quarters of sales declines in the division.

But the latest sales fall was much less than the 0.7 per cent slide the market was expecting following a cool May and intense rival price promotions, and same-floorspace sales in food rose 0.3 per cent.

On the expected relaxation of the Sunday trading laws in Chancellor George Osborne’s Budget today, Bolland said if an area demanded it M&S would be keen to open stores for longer than the six hours currently allowed.

“We have not been part of an extensive lobby for that,” Bolland said, “but if [the law] relaxes, we will certainly use it in stores where it is wanted and we would welcome it for certain stores.”

Any changes will apply to England and Wales, as in Scotland there has never been any legislation preventing Sunday trading, although some stores stay closed as a matter of custom.

On the general trading front, there was a better performance for M&S’s online business, with sales jumping 38.7 per cent.

However, this was against weak comparatives from last year, when the company lost customers after teething problems with a £150 million website relaunch.

Bolland said: “We continue to make progress against our key priorities. Our food business did very well in a difficult market. In general merchandise, sales were broadly level on last year and we are on track to deliver the planned increase in gross margin.”

The group also confirmed it is to launch a £150m share buyback programme for investors, which is due to begin today.

In May, M&S was hailed in some quarters as having turned a corner by posting its first annual profits increase in four years.

The firm reported underlying profits for the year to 28 March rose 6.1 per cent to £661.2m, beating City hopes, and easing some of the intense pressure Bolland has been under in recent years.

However, one analyst said yesterday: “M&S may have increased its [profit] margins, but this is a retailer that lives or dies on the performance of its general merchandise, and the performance there is consistently poor.”

Bolland took over from Sir Stuart Rose at the group in August 2010 and during his tenure he has seen rival Next overtake it in profitability.

He has poured billions of pounds of investment into the business to try to turn around its fortunes, while replacing its top fashion team.