Bottom Line: Bolland must use his breathing space wisely

Elizabeth Fournier
MARKS & Spencer’s boss Marc Bolland usually looks pretty pleased with himself, but yesterday his proud smile was somewhat justified. By posting the retailer’s best clothing performance in three years – based on an improvement in its crucial womenswear lines – Bolland has proved the critics wrong, pulling something that looks like the start of a turnaround out of his hat.

But not so fast. While signs of life in the chain’s tired old fashion brands is welcome, it comes at a price. In order to shift stock, M&S resorted to discounting fairly early into the season. While that clearly helped to shift sales, it will also hit margins, with Bolland’s forward-looking statement offering an unwelcome portent of what’s likely to come in next month’s full-year results. There was also bad news in the store’s online growth which, despite the launch of a brand new website just two months ago, has slowed from 22.7 per cent to just 12.7 per cent compared to the third quarter. Investors will be hoping that the uptick in womenswear sales is enough to gather momentum and lead a full-scale turnaround of the flailing general merchandise unit, but there’s still a long way to go.

In the meantime, and with some room to breathe, Bolland should turn his attention to the one thing missing from M&S’s booming food business – an online delivery service.

With the group’s groceries outperforming the struggling market, now is the perfect time to invest in a service – or tie-up – that will help it compete with the rest of the pack.

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