Food
Pressure was mounting on the chief executive of Marks & Spencer, Marc Bolland, on Monday night as investors digested the retailer’s decline in sales over the crucial Christmas trading period.
One of the City’s most influential fund managers said questions should be asked about Bolland, who joined M&S in 2010 and last week announced a 5.8% fall in general merchandise sales and a 0.1% rise in like-for-like sales in its food division.
David Cumming, head of equities at Standard Life Investments, said: “In terms of Marks & Spencer they had another disappointing set of figures and I suppose Marc Bolland has been there for some time, almost five years, so I think the chairman and the senior independent director are probably asking themselves whether his scorecard is acceptable, and they should be asking M&S shareholders the same question.”
Cumming was also asked on BBC Radio 4’s Today programme about Dalton Philips, who replaced Bolland as boss of Morrisons. The supermarket chain is due to release its Christmas trading figures on Tuesday, amid speculation about potential boardroom change.
“We’re not particularly large shareholders in Morrisons or Marks & Spencer. I think some might change CEOs, we saw that with Tesco – it’s going to be a difficult process,” Cumming said.
Tesco replaced insider Philip Clarke with Dave Lewis after issuing a profits warning in July. Lewis unearthed a string of accounting problems at Britain’s biggest supermarket chain.
Last week he announced moves to restructure the business. They are expected to lead to thousands of job cuts along with the closure of the head office in Cheshunt, Hertfordshire.
Cumming said profits at M&S had fallen over the five years Bolland had been in charge despite £2.5bn of expenditure. “I think M&S has got a lot of potential but that’s not being demonstrated by results, which is one of the reasons we’re not a major shareholder,” he said.
M&S declined to comment on the remarks, as did Morrisons – whose trading update is expected to show the continued pressure on the sector as shoppers move to hard discounters such as Lidl and Aldi.
Analysts at HSBC said that they expected like-for-like sales at Morrisons to be down 4% – which would be a smaller fall than during the same period a year earlier – and that Andrew Higginson, a former Tesco executive, might come in early as chairman, before his planned start dater.
David McCarthy, an HSBC analyst, said: “He joined the board last year as deputy chairman/chairman-elect and is not due to take over until the summer. But given the state of the industry, changes at Tesco, and Morrison’s sales losses, it might make more sense to see him take the chairman’s role sooner rather than later. 2015 is going to be a year of change for the industry and Morrisons will be part of that.”
M&S has been meeting its major shareholders since last week’s trading update, which also showed profit margins being maintained despite the fall in sales. This was welcomed by analysts on the day of the trading update.
Bolland admitted last week that M&S sales had been affected by problems with its online operations, caused by problems at its distribution centre in Castle Donington, Leicestershire. Deliveries of online orders incurred delays in the runup to Christmas.
