M&S sales figures ease pressure

Jul 2 2009 by Iain Laing, The Journal

MARKS & Spencer boss Sir Stuart Rose eased pressure on the high street retailer by announcing a smaller than expected fall in sales.

Sir Stuart, who has faced flak due to recent trading and corporate governance issues, said there were signs of an improved trend in its performance but added he remained cautious about prospects for this year and next.

Like-for-like sales in the UK dropped 1.4% in the 13 weeks to June 27, bettering the previous quarter as well as forecasts in the City.

City firm Numis Securities added £26m to its M&S profits forecast after yesterday’s update, but its estimate for a surplus of £550m in the year to March is still down on this year’s reported £604m. M&S’s sales troubles recently caused full-year profits to tumble 40%, while it cut its annual dividend by 33% – the first such move since 2000.

Like-for-like UK sales for the last full year fell 5.9%, including a 6.9% drop in general merchandise and a 5% decline in food. But the fourth quarter suggested a moderately better performance, with sales declines easing to leave sales down 4.2% on like-for-like.

The figures showed same-stores sales down 2.4% in general merchandise, with food much better than expected after a fall of 0.5%.

Sir Stuart said: “We are pleased with the improving trend in our performance. This demonstrates that the actions we are taking are working.”

He added: “Consumer confidence appears to be stabilising. However we remain cautious about the outlook for the remainder of this year and next year.”

M&S is still feeling the heat over Sir Stuart’s role and other governance issues. Shareholder body PIRC reiterated calls this week for chairman and chief executive Sir Stuart to split his role, branded as a “dangerous concentration of power” when combined. Sir Stuart has said he will step down in July 2011 with a successor in place, but this is not soon enough for many disgruntled investors.

Meanwhile, the group was also forced to make a concession on bonuses after pressure from shareholder bodies.

It announced that Sir Stuart and marketing chief Steven Sharp are to forgo a third of their long-term bonus awards in light of concerns raised by the Association of British Insurers.

The issues surrounding the chain could make for an interesting annual general meeting with shareholders, which takes place next Wednesday in London.