M&S ditches celebs as profits fall

Marks and Spencer’s has dropped celebrities in its Christmas adverts for the first time in 12 years to focus on product-driven marketing, ending a run of festive campaigns that have featured names including, Twiggy, Antonio Banderas, David Beckham, Helen Mirren, Dannii Minogue and, most recently, The X Factor finalists.

Chief executive Marc Bolland said: “I think celebrities could play an important role for some things, but not for everything.” This year’s campaign – which starts on Wednesday night – stars a four-year-old child with Downs syndrome but the focus is on the clothes being modelled.

On Tuesday M&S reported better than expected half-year results, though profits were down for the second year in a row. In line with other retailers, sales fell during the Olympics with Bolland describing London as “a village” because it was so quiet.

The Dutch-born boss, who was under pressure earlier this year after admitting the company failed to buy enough stock on some advertised lines and missed significant fashion trends in womenswear, insisted it was now on track to become a “multichannel”, international business by the end of 2013.

When the disastrous first quarter results were revealed, Kate Bostock, head of general merchandise – fashion and homewares – left the business. Since then a string of senior appointments have been made to womenswear, menswear, lingerie and home and beauty.

Bolland said: “We took steps to address the short-term issues in general merchandising and as a result we delivered an improved performance.”

He appointed a new style director, former Debenhams and Jaeger boss Belinda Earl, and has moved head of food John Dixon to replace Bostock, who has since joined online rival Asos. He said Dixon and Earl had “good chemistry”, adding that Earl, “has a very good feel for the style of what the British woman wants”. Janie Schaffer from US chain Victoria’s Secret has also been hired to head up lingerie, freeing up current lingerie boss Frances Russell to switch to the high-profile womenswear division.

To combat the problems which resulted in top lines selling out under the old regime, leaving shoppers frustrated, Bolland instructed buyers to purchase five times the number of important lines they were advertising, especially knitwear, coats and shoes. The company also backed fashion trends with more confidence. M&S said it had already shifted 44,000 military-style coats.

Bolland added that the Olympics brought more confidence to customers, but not to the bottom line. He said: “It was like a village in London and you could drive around in a couple of minutes because there was hardly anyone there.

” Did we see retail sales increase? No. Did we believe it was important to have done it, leading to that positive mood swing? Absolutely.”

As part of his three-year turnaround plan, which is halfway through, Bolland said he wants to turn the company into a multichannel international brand and plans further expansion overseas.

Bolland said that when he took over the company M&S had a strong brand, but a “complex and inflexible supply chain” with “unclear sub-brands” and stores that were “lacking inspiration”.

To combat the issues, it has launched a next-day delivery service on its website and wants its new iPhone app to be used more than any other fashion retailer’s. Currently, 43% of all online sales are for store collection.

Pre-tax profits fell 10% to £290m in the six months to the end of September, which was ahead of City expectations of £280m. Like-for-like general merchandise sales were down 1.8% in the second quarter compared with the near 7% slump recorded in the previous period. Like-for-like sales at its food division rose 1.6%.

In common with Next boss Lord Wolfson, Bolland said recent trading had been volatile: “This, coupled with continuing pressure on consumers’ disposable incomes, makes us cautious about the outlook for the rest of this year. However, we are well set up for the Christmas trading period.”

By comparison, Primark announced a 15% jump in operating profits to £356m for the year to 15 September. Like-for-like sales climbed 3% with owner Associated British Foods (ABF) flagging strong trading in Britain, particularly over the summer months, and “encouraging” sales of its winter ranges in the new financial year.

Chief executive of ABF, George Weston, said recent expansions in Europe went better than expected and the UK business continues to be strong. He added: “We sold 7.5m items of clothing with the Union Jack between the Olympics and diamond jubilee.”

However, he revealed that, like M&S, sales fell during the Olympics as shopping crowds stayed away from central London. “We put on extra temporary staff but then rather regretted it.”

The company said sales in Spain continue to impress, despite the downturn, with Weston adding that when they recently opened a store in the Alicante region they received 26,000 applications for the 200 jobs on offer.