M&S still a work in progress

The big question arising from the statement is whether M&S simply sneezed or has caught a cold.

Naturally, given M&S’s leadership position in the key clothing market, much attention was focused on the miss on general merchandise expectations and particularly shortages of some of the best-selling fashion lines.

Chief executive Marc Bolland insisted, however, that there is nothing structurally wrong and put the blame for availability issues in part on cold February weather.

The problem was that he could have sold more knitwear, for instance, but that was running low in February. The consumer typically buys it earlier and supply turnaround times are too long to enable rapid restocking.

M&S was also affected by its increased focus on keen entry-pricing - the ‘good’ component of the price architecture, rather than ‘better’ and ‘best’ - which also had a revenue effect. Bolland’s critics whisper that the performance demonstrated failure at a basic retail level. However, M&S’s clothing sales were actually only down 0.3% in the quarter and rivals would admit that availability hiccups are not uncommon in retail.

A big contributor to the general merchandise result was the home category - down 7.5% - but food was up.

Among City analysts the reaction was, in many instances, to maintain sometimes lukewarm hold recommendations.

M&S is in the midst of implementing Bolland’s strategy, including new-model stores, which were reported to have been doing well, and the expansion of ecommerce.

But it all remains a work in progress and Tuesday’s update unsettled investors, despite M&S’s confidence that it would meet full-year profit expectations.

Come May, when full-year figures are unveiled, Bolland will provide more details about the effect of the changes he has initiated. Evidence of improvement then would assuage some of the anxiety thrown up this week.