Bonus payouts slashed at M&S despite bumper £1bn profits

May 21 2008 by Iain Laing, The Journal

MARKS & Spencer’s annual profits have topped £1bn for the first time in a decade, but staff failed to cash in after the retail giant slashed bonus payouts.

The company’s 62,000 customer assistants – who gained up to £500 last time – will see payouts fall by half to a maximum of £250.

Chief executive Sir Stuart Rose – who received a total bonus of £2.6m last year – will gain no extra payout at all after the group missed internal targets, details of which were not disclosed.

M&S’s staff pot of £16.8m is a fraction of last year’s record £91m windfall. Only head office staff working on the better-performing online and international operations will be in line for any payouts.

The gloom for staff came despite the best profit performance for 10 years, although City analysts expect this to fall to around £925m next year in a darkening retail climate.

Collins Stewart’s Rob Mann said: “Although the headline numbers will no doubt be taken positively, this set of results is delaying the inevitable.”

Profits beat market forecasts of £989m by £18m. Sir Stuart – who has led the turnaround of the business since 2004 – said trading since the end of March had been “mixed”, with sales suffering in April’s downpours before recovering with better weather earlier this month.

The M&S chief remains cautious over consumer sentiment, although the group still intends to spend up to £900m on its stores this year. The company said it now has more than 21 million customers shopping in its stores every week, 400,000 ahead of the previous year.

Sir Stuart added the earlier Easter and poor weather had led to volatile trading conditions, making it hard to pick underlying trends.

“We are all finding it very difficult to read the tea leaves,” he added. But he argued the company was well-placed to cope with a downturn, saying it was a “strong business in a weak market”.

Meanwhile, food shoppers could soon be able to buy well known brands such as Marmite and Heinz tomato ketchup at M&S stores for the first time, after the group announced plans to trial the sale of around 350 branded products at 19 stores in Tyneside and Teesside from June. The pilot forms part of plans to boost its food market share to 5%.