Standard Life piles pressure on Bolland over poor M&S trading

M&S chief executive Bolland’s future was called into question by the City last week after the company said sales of clothing, footwear and homeware slumped 3.8 per cent in the 13 weeks to 29 December.

David Cummings, head of UK Equities at Edinburgh-based Standard Life Investments (SLI), said yesterday that he felt Bolland would hold on to his job “short term”.

However, he added that SLI was “not comfortable” with the slow progress in sorting out lacklustre performance in M&S’s key clothing business, and that management changes to address the issue had been tardy.

Cummings told BBC radio: “He [Bolland] has to get his autumn range right. That’s when the management changes that he’s made, albeit late, will have an impact.

“I think the market will wait to see how that range, which doesn’t really come through until six to nine months … how that’s going to work. If that is poor then he’ll be under a lot of pressure.”

Cummings added that the market could afford to wait a while partly because the group was “vulnerable to a bid from private equity, so us and the market will wait, but he is under pressure”.

He also said M&S’s shares, down 5.3p at 367.2p last night, were not “priced for success”.

Bolland, who slashed M&S’s three-year growth targets last May, has partly blamed the latest sales slide on a decision to protect profit margins with fewer promotional offers.

The SLI equities head said: “Marks & Spencer have made some progress in sort of secondary areas like logistics, etc, but the key issue for them is the performance of general merchandise, particularly clothing.”

Bolland has brought in a number of executives to help revitalise the business, including the ex-chief executive of Debenhams, Jaeger and Aquascutum, Belinda Earl, in the pivotal appointment of M&S’s new style director.

Darren Shirley, retail analyst at Shore Capital, said: “To suggest it is make-or-break for Bolland may be too stark, but next autumn and winter will be when we get the first chance to see a range that will have the input of Belinda Earl. It is obviously going to be a pretty critical range for the company.”

M&S’s festive food sales rose 0.3 per cent. Food sales have been more resilient than clothing during Bolland’s stewardship of the company since May 2010, when succeeded Sir Stuart Rose.

At different times, Bolland has put down the lacklustre performance of general merchandise, including clothes, shoes and homewares, to bad weather, buying mistakes, stock availability and competitor promotions. In bitterly cold weather last February, the group ran short of knitwear, jackets and outerwear.

Another retail analyst said: “Bolland has not been a particularly ‘lucky’ general. Last year was the second wettest on record, that never helps clothes sales, and his time at M&S has also coincided with a poor consumer backdrop.

“But other retailers, such as Next and Debenhams and John Lewis, have all done markedly better. The jury is definitely currently out on him.”