UPDATE 1-Marks & Spencer sales fall ratchets up pressure on CEO

(Writes through, adds detail and background throughout) By Neil Maidment LONDON, Jan 10 (Reuters) - Shares in Marks & Spencer fell sharply on Thursday as investors reacted to poor non-foodChristmas sales, a slump that has cranked up the pressure on thehead of the British retailer. Now in his final year of a three-year plan to make M&S aninternational, multi-channel retailer, Chief Executive MarcBolland had on Wednesday reiterated his confidence that a newmanagement team, led by ex-food boss John Dixon, would deliver abetter performance at its general merchandise arm. The group had announced sales of clothing, footwear andhomewares slumped 3.8 percent in the 13 weeks to Dec. 29 at UKstores open more than a year, worse than expected and weak incomparison to recent updates from rivals Next, JohnLewis and Debenhams. M&S shares were down 4.3 percent to 354.80 pence by 1034,even as shares in Tesco, Britain's biggest retailer,rose after the company reported higher than expected sales. Analyst reaction to the non-food sales performance rangedfrom "disappointing" to "dreadful", with the common themecentering on the rising pressure for Bolland and his generalmerchandise team to deliver. "M&S has disappointed investors many times and though thereasons have varied (rain, Olympic distraction, buying mistakes,competitor promotions etc) the conclusion seems increasinglyclear that customers are just not happy with M&S's product andvalue," Espirito Santo analyst Caroline Gulliver said. "Consequently the pressure is building on John Dixon,Belinda Earl and Laura Wade-Gery to turn the business around,"Gulliver added, referring to other senior executives. LESS PROMOTION Bolland, who said the non-food slump was in part due to adecision to protect margins with less promotional offers, hasmaintained the new team would not make a major impact until M&Slaunches autumn/winter collections in July. Seymour Pierce analysts said they believed Bolland, whoslashed M&S's three-year sales growth target in May, blaming therecession, and reshaped the general merchandise management teamin July after the group's biggest quarterly sales drop in 3-1/2years, would be given another year to put it right. Group Finance Director Alan Stewart leapt to the defence ofhis CEO on Wednesday, when Bolland was asked if he wasconsidering his position, telling reporters the Dutchman had theboard's support and shareholders were behind the strategy. One unnamed top-10 investor echoed the latter sentiment. "Some retailers attract rather more attention than otherbusinesses of their size, and also go through wider swings ofsentiment than is warranted by the underlying business. Marks isjust such a business," the investor told Reuters. "They seem to have sacrificed general merchandise sales onthe altar of profitability, so bottom-line impact shouldn't betoo severe. Sentiment had probably got a bit ahead of itself andthe recent fall in the share price has probably cooled things toa more sensible level," the investor added. M&S, a mainstay of UK town centres and known for reasonablypriced but high-quality staples such as socks and underwear, didsee underlying UK food sales rise 0.3 percent. Its results, which were for the third quarter, were due tobe published on Thursday morning but were leaked to Sky Newslate Wednesday, forcing M&S to rush out the statement. Analyst Nick Bubb said cost savings and its protected grossmargins meant full-year profit was unlikely to fall far belowthe bottom of market estimates, which range from 641 millionpounds ($1.0 billion) to 700 million, according to M&S data. ($1 = 0.6247 British pounds) (Additional reporting by Sinead Cruise, Sudip Kar-Gupta andArthur Fane; Editing by David Holmes)