May 20 - British retailer Marks & Spencer is hoping to placate investors after reporting a third year of falling earnings. But, as Sonia Legg reports, time could be running out for the CEO.
It serves 21 million shoppers a week from 750 stores but Marks and Spencer isn't the retail force it once was. It made 623 million pounds in the year to March 29 - that's almost 4% less than the previous year. Britain's biggest clothing retailer has now seen three years of falling earnings, due to its underperforming non-food business. There are now question marks about the future of the current CEO Marc Bolland, says BGC's Mike Ingram. (SOUNDBITE) (English): MIKE INGRAM, MARKET STRATEGIST, BGC, SAYING: "They have poured something like £2.3 billion over the past three years into revamping stores and repositioning products but it doesn't seem to be working and you have to feel that maybe at the end of the day it was actually too little and too late." For the first time M&S earned less in the year than its faster-growing rival Next. They mastered online selling long ago - M&S is playing catch up. It says its new site will take another 4 - 6 months to settle in. And that could impact general merchandise performance in the first quarter. Further growth is expected from M&S's upmarket food business. But a clothing team set up in 2012 has so far failed to deliver a significant pick up in sales and that's a worry, says IG's Brenda Kelly. (SOUNDBITE) (English): BRENDA KELLY, CHIEF MARKET STRATEGIST, IG, SAYING: "What we have seen over the last few months is a good degree of investment - we've seen a little bit of investment overseas as well so we could be seeing the bottom and we could and maybe we will start to see some returns on those investments but for the time being unless they sort out their women's clothing and the demographic that they are aiming that particular sector at then I think we are going to have problems here." M&S is hoping to placate investors with forecasts of higher profitability and lower capital expenditure. But the next 12 months will be key - and there's even talk that at current valuations it may be a takeover target.