Not just a turn­around, a ruth­less M&S one

High street gi­ant set to re­veal 1.4pc drop in sales, as chief ex­ec­u­tive plans re­tail es­tate re­vamp

The Sunday Telegraph - Money & Business - - Business - By Ashley Arm­strong

MARKS & Spencer boss Steve Rowe is turbo-charg­ing his over­haul of the high street gi­ant, ac­cel­er­at­ing the ex­pan­sion of its food em­pire and tak­ing a more ruth­less ap­proach to strug­gling cloth­ing stores.

The ar­rival of turn­around spe­cial­ist Archie Norman as chair­man is un­der- stood to have trig­gered a foren­sic re­view of the M&S store es­tate and em­bold­ened Mr Rowe to take more rad­i­cal ac­tion.

It is un­der­stood that ris­ing busi­ness rates are prompt­ing Rowe to de­mand rent re­duc­tions from land­lords or face shop clo­sures.

Marks & Spencer sur­prised the prop­erty mar­ket last month by pulling out of its 20,000 sq ft Covent Gar­den store af­ter fail­ing to bag a rent re­duc­tion, which has served as a warn­ing to other prop­erty land­lords.

M&S cur­rently has 959 shops in the UK, 615 of which only sell food.

Marks & Spencer has al­ready an­nounced that it will close around 30 of its larger UK stores and con­vert a fur­ther 45 shops into Sim­ply Food stores as well as shut­ting 53 of its loss-mak­ing in­ter­na­tional stores, such as its ex­pen­sive Champs El­y­see prop­erty in Paris. An­a­lysts orig­i­nally had hoped that Mr Rowe would off­load dou­ble the num­ber of stores as Marks & Spencer reels from the high street slow­down.

Clive Black at Shore Cap­i­tal said: “We see Mr Norman and Mr Rowe as an in­ter­est­ing and po­ten­tially ex­cit­ing com­bi­na­tion for M&S’S share­hold­ers, par­tic­u­larly given Mr Rowe’s strate­gic re­struc­tur­ing of the busi­ness in the UK and abroad al­lied to Mr Norman’s track record of trans­form­ing busi­nesses such Asda, King­fisher and En­er­gis.”

Mr Rowe will tell the City he is re­dou­bling his ef­forts along­side an ex­pected 12pc fall in half year un­der­ly­ing prof­its to £201m. An­a­lyst con­sen­sus is for Marks & Spencer to re­veal a 1.4pc slip in like-for-like cloth­ing and home sales next week as the busi­ness tries to re­store growth by im­prov­ing its ranges and wean it­self off dis­count­ing. Last year the busi­ness re­ported a deeper 5.9pc dive.

Along with the rest of its fash­ion peers, Marks & Spencer has been boosted by a colder Septem­ber, which lifted de­mand for au­tumn clothes.

Last month Jo Jenk­ins, di­rec­tor of cloth­ing, quit to take the helm of White Stuff just weeks af­ter for­mer Hal­fords boss Jill Mcdon­ald joined to take con­trol of the wider di­vi­sion. An­a­lysts are pre­dict­ing a 0.3pc slip in like-for-like food sales as the di­vi­sion comes un­der pres­sure from ri­val gro­cers in­vest­ing in their pre­mium ranges.

In Septem­ber the re­tailer started tri­als for on­line gro­cery de­liv­er­ies but Marks & Spencer has not taken a de­ci­sion about a wider roll-out.

Sources close to the com­pany said that Marks & Spencer’s turn­around re­mains in the early days with Mr Rowe be­liev­ing that the busi­ness is only half­way through the first phase of his “fix, re­cover and grow” strat­egy.

Steve Rowe, the Marks & Spencer chief is ex­pected to take a more rad­i­cal ap­proach to re­struc­tur­ing

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