British retailer Marks & Spencer may have had declining numbers in its clothing branch for the seventh quarter running, still the shareholders give their support to CEO Marc Bolland. It is however clear Bolland is under huge pressure, now all eyes are on him to improve the performances of the biggest British clothing retailer. Things are getting urgent, as sales again dropped 3.8 percent in the fourth quarter of 2012.
Results better than predicted
The decline of 3.8 percent is much better than the predicted drop of six percent. Furthermore the sales of food had a rise of four percent, and the share immediately rose four percent when this was announced.
Two of the biggest shareholders of M&S want to give Bolland at least another year to turn the tide. They are waiting for the effects of the investments Bolland made to improve sales lines and the distribution channel on one hand, and in the hiring of high profile – and therefore expensive – staff. Among them Belinda Earl (of Jaeger and Debenhams) and Janie Schaffer (of Victoria’s Secret).
Those same shareholders expect M&S to start producing better margins and to react to changes in the market faster than the company did in the past. Bolland confirmed that of certain top pieces from the clothing collection 50% more stock will be procured, to avoid them selling out too fast - like they did in the past year.
Bolland is putting a lot of hope on the new fall and winter collection, which will soon be presented and is the first tangible result of the new team. He also hopes investors will not convict him on this one collection.
Luckily for him the food department is doing very well, with a better result than the rest of the market: for Bolland the confirmation that M&S has the trust of the consumer when talking about origin and quality of products.
Turnaround has already begun
M&S will announce the financial results next month: profit is expected to have declined for the second year in a row. In 2011 profits dropped by one percent to 705.9 million pound (830 million euro) and now analysts are predicting a further decline in 2012 to 629 million pound (720 million euro).
They are however expecting a rise, to 682 million pound (over 800 million euro), in 2013. The first quarter was the best of the past two years, with underlying sales that were 0.6 percent higher than expected. According to an analysis of Kantar Worldpanel the market share of M&S in shoes and clothing has dropped from 11.5 percent to 11.1 percent.