Marc Bolland given ultimatum by investor to improve clothing sales by September if he wants to keep his job
Pressure is mounting on Marks & Spencer boss Marc Bolland, after a major shareholder said his job is under threat unless the retailer’s flagging clothing business improves by September.
David Cumming of Standard Life Investments – the group’s 10th largest shareholder with 1.6% of its stock – said Bolland had six to nine months to sort out clothing if he wanted to keep his job.
Speaking on BBC Radio 4’s Today programme, he said: “He has to get his autumn range right, that’s when the management changes that he’s made 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 – is going to work. If that is poor then he’ll be under a lot of pressure.”
Bolland shook up the management of the non-food business last July, replacing Kate Bostock with M&S-lifer John Dixon, as head of general merchandise. In a surprise move, he also brought in Belinda Earl, the former chief executive of Debenhams and Jaeger, as style director, working three days a week. At the time, Bolland said it could take until July 2013 for the full effects of the new team to become apparent in stores.
Cumming said shareholders were prepared to wait and see if the strategy had worked because the M&S share price already reflected its difficulties and the group could still be subject to a bid from private equity. “So us and the market will wait but he is under pressure,” said Cumming. The company was hit by speculation last summer that it could be the target of a takeover bid, with rumours that US group CVC Capital Partners had considered buying the department store chain.
Marks & Spencer had a dreadful Christmas, with like-for-like sales of general merchandise – which includes clothing and other non-food items – dropping by almost 4%. That dragged overall like-for-likes down by 1.8% and caused many to question Bolland’s future at the retailer.
Asked whether he would be with the group to announce Christmas 2013’s trading figures, Bolland said: “We are very confident on the strategy, and I will be there next year.” But the bookies are betting on Bolland’s early departure, with Paddy Power offering odds of 3/1 that he will leave in the second half of the year.
The group was also forced to release its Christmas trading figures early, after damaging sales figures were leaked, prompting some to query whether Bolland had rebels in his own head office as well as doubters among the company’s shareholders.
Bolland joined M&S with much fanfare in 2009 from supermarket group Morrisons, where he was feted for having increased sales and profits in his three years at the helm. But M&S shareholders now appear to be losing faith in his strategy for boosting sales at the department store.
First-half profits, published in November, fell for the second year in a row after womenswear sales disappointed. At the time Bolland promised the clothing ranges would become “much more stylish and more trend-driven”.
While this did not appear to have happened in time to attract shoppers over Christmas, Bolland stressed that partywear sales rose 36% over the festive period. He added that the new clothing team had been focused on selling clothes at their full price and managing stocks tightly, “resulting in slightly less stock into the Christmas sale, and a clean position at the end of the quarter”.