-- UK sales fall 2.8% as womenswear struggles again
-- CEO Marc Bolland blames worst seasonal conditions since
1910
-- Kate Bostock leaves by mutual consent as head of general
merchandise, where sales dropped 6.8%
-- Mr. Bolland faces shareholders at general meeting later
Tuesday
LONDON--Marks & Spencer Group PLC (MKS.LN) Tuesday announced
a shake-up to its senior management team as the U.K. retailer's
first-quarter sales slumped, dragged down by weakness in its
clothing division.
Kate Bostock, executive director of M&S's general
merchandise business, will leave M&S by mutual consent, the
company said in a statement, following the biggest quarterly sales
fall in the division since 2008. She will be replaced by John
Dixon, the current head of food.
"These [management] changes were quite planned for," Chief
Executive Marc Bolland said on a call with journalists. "We want a
fresh team in place and Kate was looking for a fresh
challenge."
The short-term boost provided by the queen's Diamond Jubilee was
offset by the worst seasonal conditions since 1910, Mr. Bolland
said, meaning sales of summer clothing were subdued, especially in
womenswear. Research from Nielsen released last week showed that
the quarter ending June 23 was the worst early summer period for
year-on-year sales growth since 2005.
For the 13 weeks to June 30, M&S reported a 0.7% fall in
group sales, while like-for-like U.K. sales--measured from stores
open more than a year--dropped 2.8%, broadly in line with analyst
forecasts.
The company posted a 0.6% rise in same-store food sales, boosted
by a strong campaign during the jubilee week, but sales of general
merchandise--which incorporates all non-food items and accounts for
40% of revenue--fell 6.8%, continuing a familiar story for
investors.
M&S, which has more than 700 U.K. stores, has struggled to
compete with its rivals in the fashion stakes, with fellow
high-street staples Debenhams PLC (DEB.LN) and Next PLC (NXT.LN)
eating into market share, especially in the key womenswear
sector.
"The pain could be just beginning," said John Ibbotson, director
at consultancy Retail Vision. "The unsold sun hats, summer dresses
and so on now threaten to become a millstone around their
necks."
The retailer's latest disappointing update is likely to heap
pressure on Mr. Bolland, who faces shareholders at the company's
annual meeting later Tuesday, where his 2.5-million-pound ($3.9
million) pay package will be put to the vote.
Earlier this month, investment consultancy PIRC advised
shareholders to abstain from voting in support of the company's
remuneration report and analysts have started to question the
direction of Mr. Bolland's strategy since taking over from Stuart
Rose in 2010.
Mr. Bolland will also face questions on the overall direction of
his company, especially given his focus on international expansion
in the face of a poor performance in the U.K. market.
"Shareholders are with us very clearly in terms of our
international strategy," Mr. Bolland said on the call. "We won't be
blown off course by one quarter. It's not about managing quarters;
it's about managing this company for the long run and shareholders
support us."
At 0803 GMT, M&S shares were up 3.6 pence, or 1.1%, at 324.6
pence, on a broadly flat FTSE-100 index.
Write to Peter Evans at peter.evans@dowjones.com