Pressure set to mount on M&S chief as adverts fail to woo customers

Marks & Spencer boss Marc Bolland is set to come under increased pressure from investors today as the retail chain announces its first fall in annual profits for three years.

Despite efforts to pull in customers with celebrity-laden advertising campaigns, featuring the likes of actresses Joanna Lumley and Rosie Huntington-Whiteley and actor Ryan Reynolds, sales of general merchandise have fallen in the last year.

Mr Bolland, who is reportedly set to pocket a combined pay package of around £6m this year, has been told by analysts that sales targets he set in November 2010 may be too ambitious.

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The squeeze on household incomes in the UK, where M&S has 700 stores, is likely to take some of the blame for the weaker performance, but a failure to keep up with its rivals in clothing, such as Next and Primark, is also at the root of its problems.

Nick Bubb, independent retail analyst, said: “In all, he has not delivered the sales he needs with his three-year target.

“The focus is on whether he will admit that the year has started badly.”

The group is forecast to report a three per cent fall in pre-tax profits to £694m in the year to the end of March, while sales are likely to be around £9.9bn.

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Mr Bolland is expected to step back from his goal to boost sales to between £11.2bn and £12.2bn by 2014 as the economic headwinds show no sign of abating.

While like-for-like sales of general merchandise are expected to have fallen by about 1.7 per cent in the period, food sales have put in a much stronger performance.

Clive Black, an analyst at Shore Capital, said: “Against this somewhat gloomy backdrop and current situation we believe that M&S has toughed it out reasonably well. Whilst trading momentum for 2011/12 was far from stellar, the business performed robustly in clothing and general merchandising, given market conditions, while the food business did well to outperform a tough sector.”

The group has said its prospects look brighter as the Diamond Jubilee, Euro 2012 football championships and Olympics will play into its hands by giving cause for celebration over the summer.

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