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).
Higher margins
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.
