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Sir Stuart Rose today delivered a smaller-than-expected drop in sales at High Street giant Marks & Spencer and dismissed City anger about the power he wields as executive chairman.
Like-for-like sales, which strip out new store space, were down 1.4% in the 13 weeks to last Saturday, far better than the 5.9% slump seen last year.
However, it was the seventh quarterly sales fall in a row and analysts warned that 125-year-old M&S was still on course to suffer another dramatic plunge in profits, to around £500 million, after last year's almost 40% drop from £1 billion to £604 million.
The first-quarter sales numbers were published ahead of next week's annual meeting where Rose is expected to face shareholder anger over his “all-powerful” combined role of chairman and chief executive.
Shareholders are also concerned about the slump in share price and the decision to slash the annual dividend by 33%.
Rose — who is under pressure to appoint a successor after planning to stand down within two years — said: “It's the usual annual little jamboree running up to the AGM, and frankly I'm not concerned about it.
“My job is to concentrate on running the business, getting it through the recession, doing the hard nitty-gritty work in the engine room.
“We will have a new chief executive in 2010 and we will have a new chairman by 2011. I am leaving come hell or high water by 31 July 2011.”
The fall in sales was better than the 2.5% drop expected in the City and M&S shares rose 13½p to 319½p. They peaked near 750p in mid-2007.
Rose said: “We are pleased with the improving trend in our performance. Consumer confidence appears to be stabilising.
“However, we remain cautious about the outlook for the remainder of this year and next year and will continue to run the business accordingly.”
Sales of general merchandise were down 2.4% in the first quarter, against a 6.9% fall last year, while food sales were down 0.5%, again better than last year's 5% drop.
The improvement in the food division signified a species of victory for Rose and his former PA Mark Dixon, who was appointed to take charge of food in March last year to turn the business around.
He has introduced the Dine in for £10 meal-for-two range and Wise Buys, which offers everyday food at low prices, amid concerns M&S was pricing out cash-strapped customers.
However, its supermarket rivals have reported robust growth in food sales in the first quarter. J Sainsbury reported a record 7.8% rise while Morrisons and Tesco notched up 7.3% and 4.3% respectively.
Retail analyst Nick Bubb, of Pali International, said that with sales still falling and margins under pressure, there was little reason to hang out the bunting quite yet at M&S.
“I wouldn't get carried away with this,” he said. “It is still going to be a tough year and profits will fall a long way further. It is enough to enable Stuart Rose to face down his critics and live to fight another day at the AGM.”
Reader views (1)
Despite all the negative news on the Uk retail markets, Britain will be the first country to emerge out of recession. The evidence as seen in the stabilisation of the housing market, worst of contractions seen and past.
In comparison to Australia, which has created a false image through economy falsely stimulated by way of handout will be the last to come out of recession. People in Ausland are living in false hopes given the news coming out of OECD and World bank.
Australian retailer David Jones recently announced strong trading results. Like for like sales improved but on the back of government handouts of atleast 1500 AUD per family to splash out on retail outlets. This is not going to last forever. My personal verdict is that Australian Economy is in for unwarrated shocks of life time with the country middle class becoming beggars.
- Jaspeet Singh, Subiaco Western Australia, 01/07/2009 13:01
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