Middle England gives M&S a dressing down Genteel sparks fly at Marks for its failures

IT WAS a pilgrimage of the disappointed yesterday as thousands of shareholders in Marks & Spencer packed the company's annual investors' meeting to hear the struggling retailer explain its annus horribilis.

More than 2,000 (double last year's attendance) trooped along to the Grosvenor House Hotel on London's Park Land while 700 staff had to be re-directed to the nearby Cumberland Hotel because demand for seats was so great.

The packed auditorium at the Grosvenor House looked like a snap-shot of the typical M&S customer. Smartly dressed gents in blazers and slacks checked their straw boaters in the cloakroom and sat listening attentively. Conservatively attired women in twin sets and floral print dresses took their green shareholders cards and held them aloft to ask questions from the floor.

After a year in which Marks & Spencer has suffered a near halving of profits, a collapse in its share price, a boardroom bust-up and the further indignity of now being cited as a possible takeover target, shareholders had good reason to be angry. But this was Middle England, Marks & Spencer's natural habitat. Clearly, some sections of the audience would rather bury the board of directors than praise it, but the atmosphere was more polite than executives had a right to expect.

But even some of the more anodyne questions reflected the depth of this company's woes.

"Why has the quality of your woolly cardigans gone downhill," one shareholder asked, saying she had been unable to buy one at all during the summer "which is silly because you need one on the beach when it gets chilly".

Another shareholder who marched on to the podium to display the C&A outfit she was wearing, said she was in her fifties but was now unable to buy M&S clothing because it did not fit. "When are you going to realise that women in their fifties do not have the same waistline they did when they were 18," she said. She branded M&S clothes "boring" and said she had started buying her underwear from Bhs because it was more "sexy".

A third shareholder, Carol Brett, begged the group to start stocking larger clothes - up to sizes 24 and 26 - and another called for the group's stores to start taking credit cards.

Eric Band of Beckenham in Kent said the company had forgotten its traditional customers as it tried to attract younger buyers. "It seems to me the company has lost the plot," he said.

Dr Colin Leci of Edgware, north London said: "Given that the present management is virtually identical to the management that has failed the company over the last two-to-three years, how can shareholders have any confidence?"

Investors who have seen their value of their investment slump by 30 per cent in the past 12 months were given further bad news in an update on current trading. M&S said underlying sales (excluding new shop openings) had fallen by almost 10 per cent in the first 15 weeks of the group's new financial year. General merchandise sales were down by 13 per cent with food sales down by 3.4 per cent. Brian Baldock, acting chairman following the abrupt retirement of Sir Richard Greenbury last month, admitted the performance was "frankly unacceptable."

He outlined a host of improvements designed to get the group back on track. These include a facelift for 125 stores with better lighting, improved layouts and better product displays. There will be 2,000 more staff on the shop floor by the autumn. Prices will be cut by around 5 per cent by September/October.

In clothing, where M&S has lost to Debenhams, Next, the Gap and the supermarkets, he said new ranges would include "really good products at excellent prices". The food business, which has lost to Tesco and Sainsbury, will be boosted by more new ranges.

One ex-member of staff who had been a shareholder for 25 years but did not want to be named, said she felt "very positive" about the future for the company. "I think the shares can only go up - I have decided to be positive and buy a lot more shares." They fell 11p to 377.5p yesterday.