M&S Profit Falls as Pressure on Bolland Rises

Retailer Marks & Spencer Group PLC (MKS.LN) reported another set of lackluster earnings Tuesday, putting Chief Executive Marc Bolland under increasing pressure to revive the flagging fortunes of the grand dame of the British high street after three years in charge.

The 129-year old company has been the mainstay of middle-aged, middle-class Britons for over a century, but has struggled in the last decade as competition from fast-fashion pioneers such as Spain's Inditex (ITX.MC) with its Zara brand and H&M (HM-B.SK) of Sweden has been exacerbated by changes in shopping habits, from the recent consumer downturn to the rise of online buying.

Since replacing Stuart Rose in 2010, Mr. Bolland has pledged to turn around the clothing business by overhauling stores, hiring new management to reinvigorate design and focusing on its online sales channels.

In his latest effort, Mr. Bolland last week showcased M&S's new Autumn/Winter collection which will appear in shops in July and August. The range is the first produced under new style director Belinda Earl and general merchandise director John Dixon, and is heavily skewed towards contemporary styles and shot through with trends that have been largely absent from previous seasons.

Still, some investors remain unhappy with the pace of turnaround under Mr. Bolland's three-year guardianship, which was marked by a second successive year of falling profits in the 12 months to March 31.

M&S reported net profit down 9% to GBP466.7 million as group sales rose 1.3% to GBP10 billion because of a strong showing in its food division and growth in international markets. Pretax profit, the figure closely watched by the market, fell 14% to GBP564.3 million.

Overall sales from stores open more than a year fell 1%, but within that general merchandise sales dropped 2.4%, as food rose 3.9%. It's the second year in a row that M&S's food business, which is growing strongly and now accounts for more than half of sales, has compensated for declining general merchandise, predominantly clothing sales.

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