M&S chief warns of pay cuts for around 7,000 in bid to boost sustainability
Marks & Spencer's boss has said the retail giant will face more "tough decisions" as he moves to shake up staff pay - with a view to cutting pay for around 7,000 workers - and grapple with tough high street trading.
Chief executive Steve Rowe branded the performance of its clothing and home arm "unacceptable" after last week reporting that l ike-for-like sales plummeted 8.9%.
Mr Rowe added that he is changing M&S's pay and pension scheme to make the firm more sustainable "in the long term".
The company plans to cut premium pay for Sundays, bank holidays and anti-social hours for close to 7,000 people, while 11,000 workers will be impacted by cuts to pension contributions.
The proposals will also see basic pay increased by 15% from next April to £8.50 an hour, benefiting 62,000 staff.
Speaking to shareholders at Wembley Stadium, he said: "I know that it is a big ask for me to stand here today with a new set of ideas for you trust me that things will be different this time."
He added: "We will have to take some tough decisions along the way."
Mr Rowe said the pay proposals will allow the chain to deliver "some of the highest wages in retail", while the pension changes will deliver "parity" to all employees through "a generous scheme".
He said that it was unfortunate that a small number of M&S staff will be affected by the pay plans, but said those workers will compensated for the first two years.
He added: "We will have further complex decisions to make as we go forward but they will always be taken to give M&S a long term approach."
The company also said it would launch a shareholder panel to gain further feedback on its performance.
Mr Rowe said he was proud but daunted to meet shareholders at his first AGM as chief executive but added he was "focused on shareholder returns and driving profitability".
At one stage the public address system called out for a "Mr Green" with Mr Rowe quipping, "I thought he was buying a yacht today" - a reference to retail tycoon Sir Philip Green who made a bid for M&S in 2004.
But while shareholders appeared to warm to Mr Rowe's turnaround plan, there were concerns about the flagging performance of its clothing and home business, which saw like-for-like sales plunge 8.9% in the first quarter as it cut back on promotions amid a "weak market".
"The last few years we have heard from the previous CEO Marc Bolland about the steps that have been taken and they are not working," one shareholder said.
"We need a fundamental shake-up of our performance strategy, a complete re-think and start with a clean sheet."
M&S chairman Robert Swannell replied: "We do start with a clean sheet.
"If what you haven't heard today in terms of product strategy isn't radical then there's something in the missed communication.
"Steve has set out his strategy and I'm not making any promises but you will have to judge us on our results."
Mr Swannell also apologised for the error during the reporting of M&S first quarter results, which saw it incorrectly claimed its group sales had increased.
He said: "I don't know any organisation that doesn't make a mistake", adding that it was important the company learned from it.