 M&S food chief gets the chop
(China Daily)
Updated: 2008-07-03 07:58 Marks & Spencer Group Plc, the United Kingdom's biggest clothes retailer, ousted its top food executive and said the worst sales in three years will cause profit to slump. Marks & Spencer fell as much as 22 percent in London trading, the steepest decline in at least 20 years. Revenue at UK outlets open at least a year slid 5.3 percent in the 13 weeks ended June 28, the company said, with food sales down 4.5 percent. Steve Esom, the director in charge of the food division, will leave little more than a year after he joined. Executive Chairman Stuart Rose said "consumer confidence levels have deteriorated markedly" and increased competition led to "a significantly weaker performance". London-based Marks & Spencer lost market share in food after Tesco Plc and Wal-Mart Stores Inc's Asda reduced prices to attract customers struggling with higher mortgage, energy and food bills. "This is likely to be considered a profit warning," said Charles Nichols, an analyst at Landsbanki, in a note. He plans to cut his estimate of pretax profit for the year ending March 2009 by about 10 percent to 800 million pounds. Marks & Spencer fell as much as 71.5 pence to 246.5 pence in London and was down 60.5 pence, or 19 percent, to 257.5 pence as of 9:22 am local time. A close at that price would be the lowest since Oct 1, 2001. The decline in the shares reduced the company's market value to about 4 billion pounds. 'Feeling the pinch' Same-store sales of clothing and home furnishings fell 6.2 percent in the quarter, Marks said. UK shoppers are spending less as rising energy and food bills erode disposable incomes. "Consumers are feeling the pinch," Rose said. Marks "needs a different skill set" to cope with the tougher conditions, he said, referring to the decision to replace Esom. Rose, who said on May 20 that he and fellow managers would forego bonuses after missing targets set in 2007, expects the difficult market conditions to last for two years. Agencies (China Daily 07/03/2008 page15) |
