The Mail on Sunday
New M&S chief may call for cash
CITY WILL GIVE ‘ONLY ONE CHANCE’ AT FUNDRAISING FOR UPGRADE
MARKS & Spencer’s incoming chief executive Marc Bolland could be forced to call on investors to raise money to push through changes at the business more rapidly than before, City experts have said.
The retailer, which will reveal fourth-quarter trading results this week, is undergoing a massive restructuring by converting about 100 small distribution centres into four national hubs at a cost of about £1 billion.
However, the changes may be complete only by 2016, while M&S’s competitors, including Next, Primark and John Lewis, have already pushed though simi- lar improvements. Greg Lawless, analyst at investment manager and stockbroker Collins Stewart, said: ‘Marks & Spencer has failed to keep pace with its main competitors, which have already shifted to a national distribution centre.’
M&S has estimated that the changes, which begin with a massive warehouse in Bradford this year, will save it £250 million a year when completed.
Another analyst said: ‘Bolland is going to have one chance to do this and after that the City will become much less forgiving if he comes to them asking for money. It would allow him to accelerate changes.’
Bolland is expected to wait until November at the earliest to lay down his blueprint for the business. The former Morrisons chief executive is also likely to wait until after the departure of chairman and chief executive Sir Stuart Rose.
Bolland is likely concentrate on the food division first, which now accounts for more than half of M&S’s £8.3 billion sales, before turning his attention to clothing.
The retailer is expected to report an improvement in performance on Thursday with the average forecast of analysts’ estimates indicating that like-for-like sales will improve by two per cent. However, better weather in midMarch may have given the company a lift.
M&S is also poised to update the market on its pension scheme deficit.
The previous actuarial calculation, made in 2006, of £704 million could have risen to more than £1 billion, according to an estimate by investment bank Credit Suisse.
Dutch-born Bolland starts on May 1 but is understood to have been visiting stores already in an attempt to gauge the retailer’s performance before he takes over.