Is the City beginning to lose patience with Marks & Spencer’s Steve Rowe? Just over a year after he stepped up as chief executive of the struggling stores chain, it certainly seems that way.
M&S shares were among the biggest fallers in the FTSE 100 on Tuesday as the retailer dismayed its City followers with another set of lacklustre of sales.
Its performance over the first quarter didn’t look too bad at first glance, and company veteran Rowe, who started his career with the group as a Saturday boy, was putting a positive spin on things.
He declared himself “delighted” with the core clothing division and insisted the group was exactly where it had planned to be at this stage.
The sales decline has slowed significantly in clothing, but the figure still has a minus sign in front of it, falling by 1.2 per cent like-for-like in the 13 weeks to July 1st. Adjust for the timing of Easter, and the decline widens to nearer 2 per cent.
Then there’s the food division, until recently a stellar performer for M&S and which Rowe used to run until a couple of years ago. Analysts had expected an underlying increase of 0.6 per cent, but were served up a fall of 0.1 per cent instead.
This is the second quarter in a row that food sales have underperformed the wider grocery sector and, taking Easter into account, the decline extends to 0.8 per cent. Perhaps the division is missing the day-to-day, hands-on attention of its former boss?
Unimpressed
Analysts were unimpressed. “Not much to cheer about,” observed Hargreaves Lansdown’s Laith Khalaf. Shareholders also had the chance to voice their views, as the annual meeting was held a few hours after the trading update.
M&S meetings can be somewhat surreal affairs. Always well-attended by a loyal but demanding army of small investors, topics raised with the board are many and varied, but almost always include carping about the venue for the meeting (Wembley this year), knickers and bras, dress sleeves – or the lack thereof – and, of course, the fluctuating value of the shares.
As M&S tumbled by almost 5 per cent, departing chairman Robert Swannell, who hands over to former Asda boss Archie Norman later this year, was forced to defend the share price performance. He went for the sympathy vote – as a fellow investor, he, too, was feeling the pain, he said. And performance should be judged over the long term, he added.
The trouble with that argument is M&S investors have heard it all before. Rowe must certainly be allowed longer than a year and a bit to make his mark – after all, his predecessor Marc Bolland was granted five full years. But with household incomes under growing pressure and consumer confidence evaporating, Rowe's task will become even harder in the months ahead.
One shareholder exacted her own revenge for the company’s poor performance – as tea and biscuits were served ahead of the meeting, she was spotted shovelling a tray of Bourbon biscuits into her handbag, before going on to scoop up the custard creams.
Company directors are clearly not the only offenders when it comes to corporate greed.
Gig economy review unites
It’s not often a government-commissioned report manages to unite opposing sides but the Taylor review of the gig economy has done just that – the unions hate it and the employers don’t like it either.
As for the people it’s supposed to help – the growing army of Uber, Deliveroo, zero-hours and agency workers – it’s not certain how much better their working lives will be, even assuming the government acts on the report’s recommendations.
These include legislation to provide a clear definition of what a worker actually is, as distinct from someone who is an employee or self-employed. The growing army of workers for gig economy companies would be classified as “dependent contractors” and would have additional benefits, such as holiday and sick pay.
They should be paid at least the minimum wage, on a “piece rate” basis, although this might not apply if they chose to work at times of low demand, say, in the early hours of the morning for meal delivery companies.
Authored by Matthew Taylor, a former policy chief for Tony Blair, the report also recommends the abolition of the loophole, known as the "Swedish derogation", that allows employers to pay agency workers less than permanent staff.
Unions said Taylor had “spectacularly failed to deliver” on the growing problem of insecure work. Business interests had a more mixed reaction but bemoaned the reduction in flexibility and warned that wage costs could be pushed up as a result.
Fiona Walsh is business editor of theguardian.com
