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Pin to quick picksMarks & Spencer Share News (MKS)

Share Price Information for Marks & Spencer (MKS)

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Share Price: 265.30
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Change: 4.20 (1.61%)
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Open: 263.70
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UPDATE 3-M&S pins hopes on new ranges as sales keep falling

Tue, 09th Jul 2013 15:00

* Q1 non-food lfl sales down 1.6 pct; f'cst down 0.2-3.0 pct

* Non-food decline is 8th straight quarterly fall

* Q1 food lfl sales up 1.8 pct vs f'cst up 1.0-2.0 pct

* Chairman defends CEO bonus, says management needs time

* Shares down 1.5 pct (Adds detail from annual shareholders' meeting)

By James Davey

LONDON, July 9 (Reuters) - British retailer Marks & Spencer posted an eighth consecutive quarterly fall inunderlying sales of clothing, piling pressure on management todeliver a swift turnaround when new ranges start hitting theshops later this month.

Marc Bolland, CEO since 2010, is pinning his hopes on a newclothing strategy based on more stylish and higher-qualitygarments.

But he drew criticism from shareholders at the company'sannual meeting on Tuesday for taking home a bonus in 2012-13that rose 25 percent to 829,000 pounds ($1.24 million) despite asecond straight year of falling profit.

"Every pound of the bonus that was allocated to Marc and theteam ... was wholly justified," Chairman Robert Swannell toldthe 1,133 investors who gathered at London's Wembley Stadium.

Some 95.5 percent of investors backed Bolland's re-electionas a director and 91.9 percent backed the M&S pay report.

Autumn/winter ranges were unveiled in May by Bolland's newgeneral merchandise team, led by former M&S food boss JohnDixon, and received mostly positive reviews from analysts andthe fashion press. That sent M&S shares, which have also beenbuoyed by bouts of bid speculation, to a five-year high.

The new collections will start to arrive in stores andonline from July 25 with a full launch and main advertising pushin September.

Investors have said there could be pressure for Bolland togo if the new autumn ranges do not set the tills ringing.

They will want to see signs of a pick-up when M&S updates onsecond-quarter sales on Nov. 5, while a much improved Christmastrading performance is imperative for the Dutchman's survival.

"Investors will be looking for an upturn in generalmerchandise sales by the end of the year. The new clothescollection was applauded by the fashion magazines, but the keything is if the collection sells," one of M&S's top 10 investorstold Reuters on condition of anonymity.

Bolland again cautioned the market not to expect too much,too soon, telling reporters: "We've always said that this willbe a step-by-step approach."

WAITING GAME

Some of M&S's army of, mainly grey haired, privateshareholders are losing patience.

"Over two years wars are won and lost, so just how long arewe supposed to wait until we see results?," asked M&S investorJeffrey Juddlestone at the meeting.

Swannell appealed for management to be given time to carryout what he called Britain's biggest retail transformation.

"We're not here for a popularity contest ... We will do itright and get it right and that I think is what you pay us todo, even if there is some short term pain," he said.

The 129-year-old group, which serves 21 million customers aweek from 766 British stores, said sales of non-food products,spanning clothing, footwear and homewares, at stores open over ayear fell 1.6 percent in the 13 weeks to June 29.

That compared with analyst forecasts for a fall of 0.2percent to 3.0 percent and a decline of 3.8 percent in thefourth quarter of the 2012-13 financial year.

"Despite challenging trading conditions and furtherintensification of promotional activity in the market we sawsome improvements over the quarter," said Bolland, though henoted market share did dip slightly.

Shares in M&S, up 45 percent over the last year, were down1.5 percent at 1510 GMT, valuing the firm at about 7.4 billionpounds ($11.1 billion).

Sales data for the first quarter will be the last to fullyreflect garments purchased by the previous buying team.

Though the first quarter outcome represented M&S's bestnon-food performance since the same period in 2011, whenlike-for-like sales were flat, the firm did benefit from easycomparative numbers, as in the first quarter of its lastfinancial year like-for-like sales had slumped 6.8 percent.

Sales rose 1.8 percent at M&S's food business, whichcontributes over half of group sales, versus forecasts for arise of 1.0 percent to 2.0 percent and an increase of 4.0percent in the previous quarter.

The slowdown in growth there reflected Easter falling inM&S's first quarter in 2012 but in its fourth quarter in 2013making comparative numbers much tougher.($1 = 0.6695 British pounds) (Additional reporting by Sinead Cruise; Editing by Paul Sandleand Mark Potter)

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