Bolland: I will transform M&S
Chief executive determined to transform chain after profits fall 5.8% to £665m
MARKS & Spencer chief executive Marc Bolland has insisted he is determined to see through the overhaul of the UK’s biggest clothing chain after it posted a 5.8% fall in underlying pre-tax profit to £665.2 million.
The chain, which has 46 stores in Scotland, saw a 4.1% fall in like-forlike sales of general merchandise in the year to March 30 as it lost ground in the key womenswear market.
Many in the City now warn Mr Bolland has to turn around the business by the key Christmas trading season or risk being shown the door.
However, the company’s pledge that investors can expect greater cash flow as it cuts back on capital investment in the coming years was enough to give its shares a 6.2% fillip.
Mr Bolland said: “We have always said it is a big job. There is no larger transformation in retail. This is a job I am determined to see through. We are going to make it happen.”
M&S has seen a number of management changes in recent months and yesterday revealed long-standing marketing chief Steven Sharp is to retire.
Director of store management Nanya McIntosh, who has been overseeing a revamp of its 766 UK outlets, is also to leave. Last month Marks and Spencer’s director of lingerie Janie Shcaffer quit after just three months in the job.
Among a number of other senior departures was Kate Bostock, who left last summer as Belinda Earl, the former Debenhams chief executive, became part-time style director.
Mr Bolland i nsisted: “The change is not different from any other retailer.”
Mr Sharp said of his own departure from the board of the 129-year-old company in July: “This is a natural progression. There is no conspiracy here.”
M&S is two years into a three-year programme of change launched after Mr Bolland replaced Sir Stuart Rose.
It has refurbished two-thirds of its stores, introduced delis and bakeries into some outlets as well as revamped home departments and, in a few locations, beauty stores.
M&S has also re-focused its food business on the convenience market, which has kept it out of the cutthroat supermarket sector where Mr Bolland made his name leading Wm Morrison.
This appears to be paying off – like-for-like food sales rose 1.7% last year as M&S sought to keep shoppers interested by changing a quarter of its product range.
It has also invested in improving its online presence, with a new website due after Christmas.
“We are delivering this plan,” Mr Bolland said. “This plan has the support of the board and the shareholders.”
He declined to say whether he would turn down a bonus for last year if offered one.
A key moment for Mr Bolland will be the introduction of the M&S autumn and winter collection.
It has sought to be more fashionconscious with a smaller but higherquality range of garments.
Clive Black, analyst at Shore Capital, said: “Time will tell what ‘Ms Briton’ thinks about the new ranges – we will get a feel for that from July/August onwards.”
John Ibbotson, director of retail consultants Retail Vision said: “Everything now depends on the success of the new Autumn/Winter Womenswear collection.
“Although well received, we’ll know later in the year whether it was well enough purchased to keep Marc Bolland in a job.”
M&S pleased some shareholders by guiding towards “solid” progress in profits in the current financial year and continuing momentum into the following year.
It is also predicting improved profit margins and stronger cashflow as it cuts capital expenditure to £550m a year, from £821m last year.
M&S’s shares closed at a new five-year high of 467.8p, up 27.4p on the day.
Caroline Gulliver, analyst at Espirito Santo, said: “The crux of the investment case remains: 1) how much can they improve sales, 2) do they have the right locations and amount of stores in the UK for an omni-channel retailing world, and 3) how realistic is the prospect of free cash flow generation?” RETAILERS tend to think about Christmas months before the rest of us.
Ranges have to be designed, products ordered, marketing campaigns considered while we are still planning summer holidays.
But for one retailer in particular, Marks & Spencer chief executive Marc Bolland, this Christmas is of particular importance.
Three years into his role and the UK’s leading clothing retailer is losing share in its core market: the womenswear category.
Its much trumpeted autumn/winter range will go into stores over the summer and is the key to the improvement in sales that investors say is required before 2013 is out.
Mr Bolland has achieved much since 2010, including investing in the boring back office systems that had been neglected.
A range of changes in stores should already be apparent to many Scottish shoppers.
North of the Border, 33 of its 46 stores have been redesigned in an effort to make the clothing areas easier to navigate, with improved food halls and technology allowing customers to order online.
Sales in these stores are on average 3% ahead of the rest of the estate.
Similarly, three new-look Home departments and five beauty sections have also opened in Scottish outlets and are generating improved sales.
But none of these changes will matter if the womenswear sales, described by one M&S executive as the “golden key to the golden door”, do not pick up.
Mr Bolland is betting that shoppers are prepared to pay for improved quality and a greater fashion sense.
The greatest gift that he can hope for this Christmas is that Ms Middle Britain will let him keep his job.