Marks & Spencer slash staff bonuses despite £1bn profits
Around 75,000 employees of Marks & Spencer face slashed bonus pay-outs this week despite the retail giant achieving £1bn (€1.25bn) in profits for the first time in a decade, it was reported today.
M&S - which suffered a disappointing Christmas amid darkening economic clouds - paid out a record £91m (€114.4m) last year to staff, with chief executive Stuart Rose's total bonus topping £2.6m (€3.26m).
The pot could be slashed to less than £25m (€31.4m) as the group misses its targets for financial performance, the Sunday Times newspaper said.
Its fortunes contrast with rival John Lewis, which has paid out a record bonus of £181.1m (€227.7m) to its staff - 18% ahead of the previous year.
M&S, which declined to comment, last achieved profits of £1bn (€1.25bn) in 1998 under the leadership of Richard Greenbury.
A consensus of analyst forecasts from the company puts pre-tax profits for the 12 months to March 31 at £989m (€1.2bn), although the firm faces a certain profits blow in the current trading year as consumers rein in their spending amid soaring household bills.
Rose is expected to warn on Tuesday that trading remains at its toughest for a decade and the difficult conditions could continue until 2010, the Observer newspaper adds.
In January, M&S said third quarter like-for-like sales dropped 2.2% - its first fall in nine quarters - and warned of further pain to come in the first serious blow to Rose's turnaround of the previously struggling business.
M&S is the UK's biggest clothing retailer by value and volume, but City experts also expect it to have suffered from further sales declines in the poor weather seen since Christmas, after gloomy updates from fellow high street big guns such as Next.
Investec Securities analyst David Jeary said: "After a disappointing Christmas M&S cannot, in our view, have escaped the effects of poor weather in March on its clothing business."
The company is also reviewing its food business as it struggles with heavier competition, and could unveil changes such as more product innovation and a decision to sell non-M&S products for the first time.
