Marks & Spencer shares fall as sales dip across the board

M&S defends bumper bonus scheme for bosses

9 December

Marks & Spencer has been slammed by unions over a new bonus scheme for its top bosses, which could add millions of pounds to their pay packets.

Chief executive Steve Rowe stands to earn a maximum of £1.8m on top of his basic salary in 2019, which Retail Week says would take his total pay to £4.2m.

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Finance chief Helen Weir could pocket a potential bonus of £1.3m, while Patrick Bousquet-Chavanne, the firm's customer and marketing director, could receive £1.2m.

Sky News notes that to qualify for the bumper payouts, senior staff would have to hit a series of performance targets "in areas including profitability and efficiency".

Unions have expressed their outrage, with the trade body for shop workers (Usdaw) saying that M&S is "treating workers with contempt".

Usdaw is particularly angry about a pay settlement agreed by staff "under duress". This will up the minimum hourly rate for shop staff to £8.50 per hour from next April – and £9.65 in Greater London.

The rate is well ahead of the national living wage, but in return the company is scrapping premium pay on Sundays, cutting it for bank holidays and closing its generous defined benefit pension fund.

The union is also challenging the retailer's plans, announced last month, to close the equivalent of 60 clothing and homewares stores as part of a long-awaited turnaround.

Usdaw deputy general secretary Paddy Lillis said: "Our members in M&S find it difficult to understand how the company can justify such huge rewards for senior management when the staff are facing enforced pay cuts and store closures."

An M&S spokesman said: "The changes to pay and premiums, which come into effect from April, will reward our people in a fair and consistent way, simplify and modernise our business and make our colleagues amongst the highest paid in UK retail.

"Nobody need be worse off and the vast majority will receive higher total pay."

M&S turnaround fails to win over investors

8 November

Investors have given a cool reaction to a turnaround plan announced by retailer Marks & Spencer this morning, with one broker branding it "medium radical".

It had been expected that the company would announce a number of store closures in a "seismic shift" from clothing to food sales, along with a cull of its underperforming international operations, as it delivered its third-quarter results today.

Confirming this, chief executive Steve Rowe this morning announced the closure of 30 "full line" stores, featuring clothing, food and homeware, while a further 45 would be downsized or replaced with Simply Food outlets and others could be relocated.

In all, 100 stores, accounting for 25 per cent of M&S's UK floor space, will be affected, with the net result being fewer stores selling clothing.

The results showed the company suffered another downturn in like-for-like non-food sales, tumbling 5.9 per cent in the three months to September.

In contrast, like-for-like food takings dipped just 0.9 per cent in a strongly deflationary market and total food sales jumped four per cent. Clothing market share is only rising for full-price items, but in food it gained overall by 0.2 per cent.

In addition to the shift in existing stores, M&S confirmed existing plans to open another 200 Simply Food stores by 2018/2019.

Rowe told the BBC: "This is about building a sustainable, more profitable business that's relevant for our customers in a digital shopping age."

The company will have more stores overall and "more towns will have an M&S", he added.

Internationally, the BBC says Marks & Spencer will shut 53 stores, "including all 10 in China, half of its stores in France and all its shops in Belgium, Estonia, Hungary, Lithuania, the Netherlands, Poland, Romania and Slovakia".

M&S said it now planned to focus its international business on a franchise model, adds The Guardian.

Analysts at Liberum criticised Howe's plans, saying they had "wanted to see radical action from M&S", but the turnaround strategy was only "'medium' radical".

After rising at the open, Marks & Spencer shares were 1.9 per cent down in mid-morning trading.

Marks & Spencer in 'seismic shift' away from clothing sales

7 November

Marks & Spencer is about to embark on a "seismic shift" away from its traditional reliance on clothing sales, says Sky News.

The broadcaster says M&S's new boss, Steve Rowe, is expected to announce "a radical shake-up of its high street presence aimed at persuading the City that he can revive the fortunes of Britain's best-known retailer" when he presents the latest trading update tomorrow.

The move will include closing a number "in the low dozens" of stores, while Sky News says others will see "space reallocated from clothing to its more successful food operations". Several more stores could be relocated.

Ultimately, this "will mean M&S's clothing range being sold in a substantially smaller number of shops, which one retail analyst described as 'a seismic shift' for the company", it adds.

Clothing lines have traditionally dominated the high street store, but sales have been in decline in recent years while its highly regarded, own brand-focused food operation has been on the up.

M&S has nearly 600 Simply Food outlets, around twice the number of its "full-line" stores, and plans to open another 200 by 2018-2019, increasing its overall high street presence.

Rowe, who took over the top job in April, has said improving non-food sales remains his number one priority, says the BBC.

In July, after the group announced its worst quarterly clothing sales "for a decade", he announced plans to refocus attention back on the traditional "Mrs M&S" customer base of loyal, over-50s.

His strategy also includes "price cuts and promotions… that [are] expected to dent profits in the short term", adds the BBC.

Bloomberg reports that M&S's "loss-making international operations" could also be hit in tomorrow's announcement, with Rowe expected to announce the closure of stores in China and its flagship store on the Champs-Elysees in Paris.

Meanwhile, more than 500 jobs are also going in the company's head office in an effort to cut costs.

Can 'Mrs M&S' turn around Marks & Spencer?

13 July

Marks & Spencer has appointed a unique panel of small shareholders to help it reverse falling sales.

Chief executive Steve Rowe told the company's annual general meeting yesterday an all-female group of over-50s had taken part in a trial consultation to gather ideas on how the store should revamp its ailing clothing lines.

The group represents the loyal "Mrs M&S" customers Rowe has said were "neglected as the retailer chased younger shoppers".

However, he has promised to "cherish and listen" to Mrs M&S to turn around the dire clothing sales, which have been in decline for around four years.

Chairman Robert Swannell said the panel would become a regular feature, advising the board and scrutinising performance.

The investors told M&S bosses that the current colour range contained "too much pastel" and required "more sparkle".

The clothes orders have since been revised, with "twice as many cardigan-style coats as originally planned and in an additional colour", reports the Daily Telegraph.

However, the plans were not warmly received by all shareholders, with one woman taking "umbrage at the stereotype", reports The Guardian.

“In my view, the remark about Mrs M&S shows that you don't [understand your shoppers]," she said. “We don't live in a world where women dress from head to toe in one brand. We're individuals and don't like to be labelled, especially when it identifies you with a failing retailer."

Rowe is trying to improve M&S's fortunes by updating its clothing range and curing it of what he branded an addiction to "the drug of discounting". However, his first quarterly sales update last week revealed a massive 8.9 per cent slump in the three months to 2 July, compared to 2015.

The company is also grappling with a pay row over its plans to cut premium rates for Sundays, bank holidays and anti-social hours, says City AM.

This is part of a plan that will see basic pay increase by 15 per cent next April to keep rates ahead of the national living wage. The company says it will pay among the "highest rates in retail".

But unions have decried revelations from company documents that staff refusing to accept the changes could have their contracts terminated and replaced with revised terms.