LONDON Marks & Spencer's (MKS.L) army of small shareholders warned Chief Executive Marc Bolland they were running out of patience on Tuesday after the British retailer reported its 12th consecutive drop in quarterly general merchandise sales.
Bolland, CEO since 2010, has spent 2.3 billion pounds ($3.9 billion) in three years to address decades of under investment at the country's biggest clothing retailer, overseeing the redesign of products and stores and hiring a new clothing team.
But a trading update ahead of the annual shareholder meeting showed first-quarter sales were hit by problems with its new website, which sent online sales down 8.1 percent, and dragged clothing, footwear and homeware sales down 1.5 percent at shops open at least a year.
The problem with the website, while well-flagged, took the shine off a small rise in sales at Marks & Spencer's (M&S) flagship womenswear ranges and prompted questions about when the heavy investment would pay off.
"This must be the slowest turnaround of a ship in history," a private M&S shareholder identified as Mr Jarvis, told a packed annual investor meeting at London's Wembley Stadium complex.
Roger Leon, another private shareholder, accused Bolland of a failure of leadership, while a third, retired staff member Mr Brown, said the CEO had consistently failed to deliver.
"Each time (AGM) your promises have filled us full of confidence for the forthcoming year, only to return a year later full of disappointment," he said.
Private shareholder John Farmer, a meeting regular, also echoed the negative tone. "Let us see some actual improvement, rather than recurrent excuses," he said.
With more than 750 shops across Britain and an estimated 24 million customers passing through its doors every week, M&S has a large and often vocal minority of small shareholders that own about 30 percent of the equity. But it is the major institutions that will decide Bolland's future and so far they have been prepared to give him more time.
"I'm not sure that anybody would necessarily think that somebody else could do a substantially better job," one institutional shareholder said.
Bolland's re-election as a director of the company was backed by 96 percent of investors who voted at the meeting, according to indicative poll results.
Chairman Robert Swannell accepted the general merchandise division had not come up to expectations but said shareholders would soon see improvements from the 130-year-old group. "We've made it very clear we need to deliver on our investment and that we intend to do," he said, though he stressed improvement would be "step by step by step by boring step."
The new website, launched in February, is a pillar of M&S's intended transformation into an international retailer reaching customers through stores, the internet, and mobile devices.
Shares in M&S, which started as a market stall in Leeds in 1884, were down 1.2 percent by 1520 GMT. They are down 7 percent over the last year and down 42 percent since their peak in 2007.
While analysts said trading in the 13 weeks to June 28 showed some improvement, they added Bolland had much to do.
"It will still take a considerable amount of time for M&S to demonstrate that it can break the mould, grow its non-food offer, maintain market share and build earnings," said Shore Capital's Clive Black, who has a "hold" on M&S stock.
A new clothing team Bolland set up in 2012 has so-far failed to deliver a sustained increase in sales and, for the first time, M&S earned less in the year to the end of March than its faster-growing rival Next (NXT.L).
M&S said like-for-like sales of non-food products, fell 1.5 percent - in line with analysts' forecasts but were worse than a decline of 0.6 percent in the fourth quarter of the firm's 2013-14 financial year.
"We have seen a continued improvement in clothing, although, as anticipated, the settling in of the new M&S.com site has had an impact on sales," Bolland said.
The firm forecast M&S.com would return to growth ahead of the peak trading period of November and December.
CFO Alan Stewart said the website and the firm's new e-commerce distribution center at Castle Donington in central England were performing in line with internal expectations despite reports of navigation and registration problems.
He said 3.2 million customers had registered for the new site and M&S expected to get 6 million eventually.
The retailer said while like-for-like sales in womenswear were positive, overall clothing sales fell 0.6 percent on the same basis, reversing a 0.6 percent rise in the fourth quarter.
“We’re actually very pleased," Bolland said, adding that the rise in womenswear sales came despite fewer promotions, while M&S's food business delivered a 19th straight quarter of growth, with like-for-like sales rising 1.7 percent.
"I'm really committed to what I’m doing," said the CEO, who last week shuffled the responsibilities of his executive team.
Swannell said nothing should be read into this regarding Bolland's eventual successor.
($1 = 0.5877 British Pounds)
(Editing by Mark Potter and Jane Merriman)