M&S shake-up as bad summer takes its toll on clothing sales

The wettest April and June since records began meant sales of summer favourites such as casual tops took a hammering.

Defending the group’s performance chief executive Marc Bolland, who was parachuted in from Bradford-based Morrisons, said: “It’s nothing to do with style, this is simply that people didn’t buy into summer clothing as much as they normally would have done.”

M&S said its head of general merchandise Kate Bostock will leave the company on October 1 by “mutual consent.”

Ms Bostock has been strongly linked to a senior role at online fashion retailer ASOS, which declined to comment.

Belinda Earl, a former chief executive of Debenhams, Jaeger and Aquascutum, will take over the new role of “style director” from September 1.

Ms Earl’s brief will be to attract the 35 and under age group who prefer to shop in more fashionable stores such as Zara and Top Shop, without alienating the key older customer.

Ms Bostock will be succeeded by John Dixon, a well regarded M&S veteran of 26 years, who has been the head of the food business for the last four years.

Steve Rowe, currently director of retail, will succeed Mr Dixon as the head of the food business.

Independent retail analyst Nick Bubb said: “M&S desperately needs some stability in top management, but Marc Bolland is fighting for his own job, so he has, somewhat predictably, made poor Kate Bostock, the head of M&S clothing, the scapegoat for the poor first quarter trading.”

M&S’s UK like-for-like sales fell 2.8 per cent in the 13 weeks to June 30, the firm’s worst quarterly drop in sales since December 2008.

While the wet weather played a role, resilient sales from rivals such as John Lewis, Debenhams and ASOS suggest some mistakes were made.

“M&S’s problems in womenswear go far beyond the weather, as they are clearly losing market share,” said Mr Bubb.

The decline in sales was a little better than analysts’ expectations of a fall of three per cent, but down considerably on the 0.7 per cent decline in the fourth quarter of the previous year when the retailer ran out of best-selling women’s knitwear and footwear lines.

M&S’s like-for-like general merchandise sales, which include clothing, footwear and homewares, fell 6.8 per cent.

Mr Bolland said the merchandising issues of the previous quarter had continued to have an impact on sales but would be sorted out for the autumn/winter season.

Like-for-like food sales rose 0.6 per cent, boosted by demand during the Diamond Jubilee.

Analyst Sam Hart at Charles Stanley said: “We expect trading conditions in UK general retail to remain challenging over the medium term, with the consumer environment subdued and competitive landscape intense.

“The bias of the M&S customer base towards older demographics and more prosperous socio-economic groups, however, means we expect demand to be relatively resilient.

“Significant self-help opportunities also exist at M&S, particularly in the areas of online, international and the supply chain.”

The group’s shares closed up two per cent, a rise of 6.8p to 327.8p, after investors welcomed the top management changes

Paul Mumford, senior investment manager at Cavendish Asset Management, said: “The big disappointment with M&S’s results lies with like-for-like sales in merchandise, which are down nearly seven per cent. This seems likely to be a general consequence of weak consumer spending and poor weather, hitting its summer range and womenswear particularly hard.”

He added that other retailers in a similar market to M&S such as JJB Sports have also seen similar falls in the period.

“Its food side has held up well, and will stand it in good stead until the rough patch subsides and consumer spending picks up again. Lower fuel and other operational costs will offset the impact on margins to some extent,” said Mr Mumford.

In May Mr Bolland reduced Marks & Spencer’s sales forecast for its three-year growth drive and since then analysts have marked down annual profit forecasts to £680m.

Britain’s awful summer weather has exacerbated the situation for store groups, with many forced to discount products early.

The start to July has been very wet and the Met Office is not forecasting any let up in the rain.

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