This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.guardian.co.uk/business/2013/may/21/marks-spencer-profits-fall

The article has changed 6 times. There is an RSS feed of changes available.

Version 3 Version 4
Marks & Spencer profits fall again Sell your shares if you're unhappy, says M&S chief Marc Bolland
(about 9 hours later)
Profits at Marks & Spencer have fallen for the second year in a row as its much maligned womenswear division continued to disappoint. Marks and Spencer's chief executive Marc Bolland has told shareholders that if they are unhappy with the business they should sell their shares, as the underperforming womenswear division dragged the company to a second consecutive decline in annual profits.
UK sales fell 1% overall, dragged down by a poor performance in general merchandise, which dropped 4.1% on a like-for-like basis. UK sales fell 1% overall, with a particularly poor performance in general merchandise – mainly fashion and homewares – where sales dropped 4.1% on a like-for-like basis.
The results might have been worse had it not been for a 4.5% rise in international sales and a 16.6% boost in multichannel business. Food was also up 1.7% in the UK.The results might have been worse had it not been for a 4.5% rise in international sales and a 16.6% boost in multichannel business. Food was also up 1.7% in the UK.
Total group sales were up 1% to £10bn; however, pretax profit for the year to end of March fell 5.8% to £665.2m. Total group sales inched up to £10bn but profit for the year to end of March fell 5.8% to £665m.
Chief executive Marc Bolland said: "In a challenging market, M&S sales grew by 1.3%. Three of the four parts of the business made strong progress. Bolland is under growing pressure to improve sales and some analysts believe he will lose his job if the business does not show strong signs of improvement over the coming months. However, he insisted that "time frames are irrelevant" and said that unhappy shareholders could always "vote with their feet".
"We are working hard to get the general merchandise performance back on track. We have already made progress in our operational execution, and our new autumn/winter ranges have received a positive reaction." He added: "I've always said this is a big job. I think you have seen from the scope of the job that this is one of the largest transformations in retail that you've seen in the UK. This is a difficult job to see through. I'm prepared for it because I like a job like that."
The autumnwinter fashion range was launched last week and is being seen as "make or break" for Bolland. The shares climbed 27p to 268p – their highest level since 2008, but still way short of their 742p peak in 2007.
The group's poor performance has led to speculation that Bolland, who joined M&S three years ago, could be under threat and there have also been rumours of a possible takeover by private equity groups. It has been a difficult year for M&S, with bad summer weather last year leaving summer dresses unsold.Bolland has installed a new management team to revamp of its key womenswear ranges, appointing a new head of general merchandise, John Dixon, and bringing former Debenhams chief executive Belinda Earl on board as part time style director.Their new autumn/winter fashion range was launched last week and is being seen as "make or break" for Bolland.
Analysts were unimpressed with the figures. Bryan Roberts, Kantar director of Retail Insights, said he was concerned that "the feted autumn/winter clothing range will not be the silver bullet that some hope it might be". New store formats have been rolled out across 337 stores – 65% of total sites – with the remaining due for an upgrade by the end of the year.
These concerns were echoed by Freddie George at Cantor Research. He said it would take time before the new womenswear ranges resonated with customers – and possibly up to three seasons before it had any real impact on sales. It would also take time for M&S to attract the younger, freer spending consumers that it needs as its core customer base ages. Bolland described the online business as M&S's new "flagship store". However, he said there are no plans to introduce an online home delivery service for food, despite it being one of the few areas of success for the business.
Bolland said there were no plans for M&S to launch its food range online, a policy he also adopted at his previous company Morrisons, which left the UK's fourth biggest supermarket falling behind its rivals. It signed a deal with Ocado last week in an attempt to catch up. He said: "We are the fastest growing retailer in food by far at the moment and part of that is because we have concentrated on getting people into our stores to see innovation for themselves. The business case against us going online is that our basket size is much smaller than supermarkets. We need to have between £100 and £125 baskets for it to be any way affordable and our baskets are very small because it is a top-up shop."
He also said capital spending would fall to £775m, below guidance of £850m, explaining that most of the legacy issues in the supply chain and in stores had been resolved, with two-thirds undergoing an upgrade. His former employer, Morrisons, recently completed a 25-year deal with Ocado to set up its first online delivery service. Bolland said during his time there that he did not believe an online model would work.
"We have done most of the heavy lifting of the legacy investments. The car has been rebuilt, however it still needs the completion of the ecommerce distribution." Sophie Albizua, co-founder of the eNova Partnership, a multichannel retail consultancy, said M&S should not dismiss a click-and-collect online food business because "M&S has the advantage of a differentiated food range, away from the lower margin weekly shopping, and an existing multichannel customer base who will increasingly demand the whole range online."
On his future prospects at the company, he said: "I've had this question over the last nine months. This is a big job, we have a great transformation going on and we have a lot of hard work ahead of us. Due to the store upgrades and the improvement in the supply chains, capital spending hit £821m. This is slated to fall to £775m next year and £550m from 2014/15 onwards – lower than expected. Bolland said: "We have done most of the heavy lifting of the legacy investments. The car has been rebuilt, however it still needs the completion of the e-commerce distribution."
"A big job comes with pressure and I knew that when I started the job. We are not concerned about wooing back the lost shopper."