No pain, no gain: M&S boss to map out rocky road to recovery
By James Davey
LONDON (Reuters) - The new boss of British retailer Marks & Spencer (MKS.L: Quote) will deliver some uncomfortable truths to investors next week: turning around its clothing business will require yet more costly change and could squeeze short-term profits.
Chief Executive Steve Rowe will set out his strategy to shareholders on May 25, almost two months after he replaced Marc Bolland at the top of the 132-year-old firm, a UK institution that has fallen out of fashion over the last decade.
For generations, M&S dressed British shoppers of all ages. But the advent of fast, cheap fashion at one end of the market and affordable luxury at the other - combined with fierce online competition - has left it struggling to return to its glory days.
Company veteran Rowe, 48, must convince investors he can lure shoppers back to its clothes - part of its flagship general merchandise division - and make progress in matching the success enjoyed by its upmarket food business.
"The general merchandise business has struggled for years to gain any momentum so we'll be looking to see the extent to which Rowe can turn that around and how credible the strategy is," said Simon Gergel, chief investment officer for UK equities at Allianz Global Investors, one of M&S's top-40 shareholders.
"We've had lots of false dawns from this company."
Rowe's plan is likely to involve more price cuts and improving the quality of clothes, according to analysts, while he could reduce the number of the retailer's fashion brands, which include Autograph, Limited, Per Una and Indigo.
With an increasing number of goods sold online, the CEO could also kick off a review of M&S's use of store space, including how much space should be devoted to food and to clothing, and its nearly 900 locations and office requirements. Continued...