Retailer Marks & Spencer Group PLC (MKS.LN) reported another
set of lackluster earnings Tuesday, putting Chief Executive Marc
Bolland under increasing pressure to revive the flagging fortunes
of the grand dame of the British high street after three years in
charge.
The 129-year old company has been the mainstay of middle-aged,
middle-class Britons for over a century, but has struggled in the
last decade as competition from fast-fashion pioneers such as
Spain's Inditex (ITX.MC) with its Zara brand and H&M (HM-B.SK)
of Sweden has been exacerbated by changes in shopping habits, from
the recent consumer downturn to the rise of online buying.
Since replacing Stuart Rose in 2010, Mr. Bolland has pledged to
turn around the clothing business by overhauling stores, hiring new
management to reinvigorate design and focusing on its online sales
channels.
In his latest effort, Mr. Bolland last week showcased M&S's
new Autumn/Winter collection which will appear in shops in July and
August. The range is the first produced under new style director
Belinda Earl and general merchandise director John Dixon, and is
heavily skewed towards contemporary styles and shot through with
trends that have been largely absent from previous seasons.
Still, some investors remain unhappy with the pace of turnaround
under Mr. Bolland's three-year guardianship, which was marked by a
second successive year of falling profits in the 12 months to March
31.
M&S reported net profit down 9% to GBP466.7 million as group
sales rose 1.3% to GBP10 billion because of a strong showing in its
food division and growth in international markets. Pretax profit,
the figure closely watched by the market, fell 14% to GBP564.3
million.
Overall sales from stores open more than a year fell 1%, but
within that general merchandise sales dropped 2.4%, as food rose
3.9%. It's the second year in a row that M&S's food business,
which is growing strongly and now accounts for more than half of
sales, has compensated for declining general merchandise,
predominantly clothing sales.
Write to Peter Evans at peter.evans@dowjones.com
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