London - Marks & Spencer's army of small shareholders warned chief executive Marc Bolland they were running out of patience on Tuesday after the British retailer reported its 12th consecutive drop in quarterly general merchandise sales.
Bolland, chief executive since 2010, has spent 2.3 billion pounds ($3.9 billion) in three years to address decades of underinvestment at the country's biggest clothing retailer, overseeing the redesign of products and stores and hiring a new clothing team.
But a trading update ahead of the annual shareholder meeting showed first-quarter sales were hit by problems with its new website, which sent online sales down 8.1 percent, and dragged clothing, footwear and homeware sales down 1.5 percent at shops open at least a year.
The problem with the website, while well-flagged, took the shine off a small rise in sales at Marks & Spencer's (M&S) flagship womenswear ranges and prompted questions about when the heavy investment would pay off.
Shares in the group, which also sells upmarket food, were down 0.9 percent by 14:00 SA time.
“This must be the slowest turnaround of a ship in history,” one private shareholder told a packed investor meeting at London's Wembley Stadium complex.
Another accused the group of a lack of leadership, while a third said it had lost sight of the job of a retailer - “producing goods that appeal to the public.
“Let us see some improvement, rather than recurrent excuses,” private shareholder John Farmer told the meeting.
With more than 750 shops across Britain and an estimated 24 million customers passing through its doors every week, M&S has amassed a large and often vocal minority of small shareholders.
But it is the major institutions that will decide Bolland's future and so far they have been prepared to give him more time.
Bolland's re-election as a director of the company was backed by 96 percent of shareholders who voted at the meeting, according to indicative poll results.
Chairman Robert Swannell accepted the general merchandise division had not come up to expectations but told shareholders they would soon see improvements from the 130-year-old group.
“We know we have to do more,” he said. “We now have to deliver on the investment we've made.”
STEP BY STEP
The new website, launched in February, is a pillar of M&S's intended transformation into an international retailer reaching customers through stores, the internet, and mobile devices.
Shares in the group, which started as a market stall in Leeds in 1884, are down 4 percent since the start of this year and down 42 percent since their peak in 2007.
Private shareholders own about 30 percent of the retailer's equity.
While analysts said trading in the 13 weeks to June 28 showed some improvement, they added Bolland had much to do.
“It will still take a considerable amount of time for M&S to demonstrate that it can break the mould, grow its non-food offer, maintain market share and build earnings,” said Shore Capital's Clive Black, who has a “hold” stance on M&S stock.
A new clothing team set up in 2012 has so-far failed to deliver a sustained increase in sales and, for the first time, M&S earned less in the year to the end of March than its faster-growing rival Next.
M&S said like-for-like sales of non-food products, fell 1.5 percent - in line with analysts' forecasts of down 1-2 percent but worse than a decline of 0.6 percent in the fourth quarter of M&S's 2013-14 financial year.
“We have seen a continued improvement in clothing, although, as anticipated, the settling in of the new M&S.com site has had an impact on sales,” said Bolland.
The firm said M&S.com sales fell 8.1 percent, though there had recently been a gradual improvement in performance.
It said it expected the site to return to growth ahead of the peak trading period of November and December.
Finance director Alan Stewart said the website and the firm's new e-commerce distribution centre at Castle Donington in central England were performing in line with internal expectations.
He said 3.2 million customers had registered for the new site and it expected to get 6 million eventually.
M&S said that while like-for-like sales in womenswear were positive, overall clothing sales fell 0.6 percent on the same basis, reversing a 0.6 percent rise in the fourth quarter.
“We're actually very pleased,” Bolland said, adding that the rise in womenswear sales came despite fewer promotions.
“We believe that step-by-step we are on the right track,” he said, adding “I'm really committed to what I'm doing.”
M&S's food business, which contributes more than half of group sales but less profit, is performing better and delivered a 19th straight quarter of growth.
Like-for-like food sales rose 1.7 percent, against analyst forecasts of up 1.5-2.5 percent and a fourth-quarter rise of 0.1 percent.
The outcome was boosted by the fall of Easter in M&S's first quarter this year. - Reuters