Shareholders attack Marks & Spencer as website revamp loses customers
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Version 0 of 1. Marc Bolland's ability to turn around Marks & Spencer was called into question on Tuesday as an improving sales picture at its important womenswear business was overshadowed by a drop in sales at its new £150m website. M&S said online sales had fallen 8% in the past three months as customers were unable to navigate through the glossy-magazine-style articles and videos to make purchases. The disruption is expected to last into the autumn with Bolland predicting a return to growth before the key Christmas trading months of November and December. The disappointment came as Bolland faced the retailer's small investors at its annual shareholder jamboree at Wembley stadium. After three years of falling profits, irritable shareholders took the board to task on issues ranging from board succession to the dearth of V-necked tops for women with "generous bosoms". Michael Brown, a former M&S employee, accused the Dutchman of promising much but delivering only disappointment: "Each [AGM] your promises have filled us full of confidence for the forthcoming year, only to return a year later full of disappointment," he said. "Profits are down and the share price is languishing where it was a decade ago. Why should we believe now that your plans will start to deliver?" Private shareholder John Farmer, a meeting regular, echoed his sentiments. "Let us see some actual improvement, rather than recurrent excuses," he said. M&S chairman Robert Swannell defended the business and said the company would reap the fruits of several years of heavy investment. "We have made it clear that we didn't hit expectations this year," he said. "We are not hiding from that. We need to deliver on our investment and that we intend to do." Updating the City earlier in the day Bolland had flagged an improving trend in womenswear with "a small positive growth" in like-for-like sales in the first quarter of its new financial year – although underlying clothing sales were down 0.6% as other clothing departments lost ground. The website problems had a disproportionate impact on M&S's homewares business as about a third of these sales are online. Poor homewares sales meant like-for-like sales for general merchandise were down 1.5% in the 13 weeks to 28 June – a performance that means the division has been in decline for three years on the trot. M&S style director Belinda Earl, who joined the business in 2012, received a warm reception when she took to the stage to update shareholders on the work she has been doing. She scored early points by tackling the "crucial" subject of sleeves and saying that the firm had listened to customer feedback. In the past its mature female shoppers have complained about the coverage offered by its dresses and Earl announced 90% of its dresses now come with sleeves. "We have not always met our expectations this year but the clothing business is clearly showing signs of improvement," she added on a more serious note. "We do know we have more to do but we are on track with the strategy." The near 900 shareholders at the meeting provided as good a sample as any of M&S's shoppers with Earl's handiwork getting mixed reports. "The colour and styles are still too old fashioned," said Gayle Shakespeare. "If you go into the Classic section it's like going into a charity shop". Another, Pat Beard, was enthusiastic about the "lift and sculpt" trousers: "It's an amazing fabric." M&S said that about half of the 6 million shoppers who used its old website, which was run by Amazon, have registered for the new site. Although it boasts an upmarket Net-a-Porter style it is clearly a source of frustration for shoppers who have inundated M&S's Facebook page with complaints. "Hate the new website as it is so tricky to use," wrote Sarah Milford, while another customer, Kay Floyd, commented: "Refuse to shop online as the website is the most user unfriendly and awkward to navigate. I end up being so frustrated I just give up and shop elsewhere." Alan Stewart, M&S finance director, insisted nothing "had gone wrong" with the website's relaunch. "We already flagged this earlier in the year [in May] that the settling-in period for the new site will impact sales," he said. "It is a bit like going to the supermarket for milk, they've moved it and you can't find it immediately." Shore Capital analyst Clive Black said the online hiatus had overshadowed an improving picture in womenswear and in store. "The dotcom fiasco, and that is what it looks like, noting as we do that we have seen many more complaints over praises for the current proposition, leaves a bitter taste for investors to our minds," said Black, "M&S doesn't seem to be able to spin all the plates at the same time." The firm's shares closed down more than 1% at 427.4p. |