LONDON BRIEFING:IT'S ALWAYS tough, taking on a new job when the old boss is still around – just ask Alistair Darling, forced to grapple with Britain's ballooning budget deficit under the gaze of the man who helped create it. How Darling must have ached to point the finger at Gordon Brown.
Marc Bolland, chief executive of Marks & Spencer, has been dealing with a similar dilemma: how to come up with a new vision without trashing the legacy of former chief Sir Stuart Rose, who is not leaving the company until the end of the year.
Bolland joined M&S from the supermarket group Morrison’s six months ago and has been working on his strategy since.
He unveiled it yesterday to the accompaniment of a 17 per cent increase in first-half profits, to £348.6 million (€404 million), although, like others, M&S warned of tougher times ahead.
It was not the profits the market was interested in, however, but Bolland’s plan to take M&S forward – and this involves a distinct unravelling of several of the strategic moves put in place during the Rose regime.
Careful to describe his vision for M&S as “evolution” rather than “revolution”, Bolland outlined what can best be described as a “back to basics” approach for the chain.
In an admission that the bewildering proliferation of clothing brands has only served to confuse the customer, Bolland is axing the Portfolio line launched by Rose in 2008 and will instead concentrate on building the core M&S brand under a new “Only at M&S” banner.
A year ago, M&S departed from its long tradition of stocking only own-brand products in its food stores. In came 400 big brand names, ranging from Marmite to Kit-Kat, PG Tips, Kellogg’s and Coca Cola, in a move Rose believed would encourage customers to use M&S for a full weekly shop rather than just to top up on luxury items. It was seen as a way to compete more effectively against Waitrose, which last year overtook M&S in market share. Now that move has been abandoned too, with the number of non-M&S brands on offer to be slashed by 75 per cent.
A halt has also been called to M&S’s unsuccessful move into technology and electrical products, such as televisions. The space freed up as a result is to be returned to the group’s traditional homewares departments.
Bolland is backing his vision for the group with the promise of an extra £300 million a year of capital spending over the next few years, with a target of adding between £1 billion and £1.5 billion to UK sales by 2014, taking the group total from £9.4 billion to £11.5 billion to £12.5 billion.
By 2015, he wants 95 per cent of shoppers in the UK to be within half an hour’s drive from a full-sized M&S store and he wants those stores to be brighter and easier to navigate.
He is keen to resume overseas expansion, highlighting the opportunities in India and China, although it noted that sales in Ireland and Greece “continue to be impacted by the economic downturn”. The group is targeting overseas sales, excluding Ireland, of up to £1 billion.
It is also aiming for a doubling of online sales, to £1 billion. The website will be given a long- overdue revamp, although there are still no plans to offer a full food range online.
There were plenty of sales and spending figures in Bolland’s presentation yesterday but little firm guidance on profits. If he achieves the sales growth he’s targeting, profits in the next couple of years could once again hit the magical £1 billion mark, first seen in 1998 and again, briefly, a decade later.
Sir Stuart was keeping his own counsel yesterday, quite rightly allowing the new boss to do the talking, so it’s hard to say what he made of Bolland’s proposed measures. They went down well in the City though, where, despite some criticism of his rather too frequent use of marketing jargon, analysts applauded the former supermarket boss’s confident grasp of detail.
Some had hoped for more radical change – for example, a bigger cull of the plethora of clothing brands or a move to a full food offer online – but most were happy with the plans outlined by Bolland at this stage. There was also relief that he had resisted any temptation to push through change for change’s sake.
After all, M&S may have been a lacklustre performer in recent years , but the business is far from broken. For the time being, the market will be more than happy if the new MS boss can deliver on his ambitious sales targets.
Fiona Walsh writes for the Guardian newspaper in London
