Marks & Spencer’s chief executive, Marc Bolland, is to stand down and will be succeeded by Steve Rowe, its former food boss who recently took over clothing. The surprise departure came as the retailer reported a bigger-than-expected fall in clothing sales.
The Guardian reports M&S said Bolland, who has run the company for the last six years, would hand over to Rowe on 2 April, the end of its financial year , but would continue to be paid until 7 January 2017.
Rowe, whose father was a director of M&S until 2000, led the successful food business until last July, when he took charge of the general merchandise division, which covers clothing, shoes and homeware, and became one of the favourites to succeed Bolland.
M&S reported a 5.8% fall in like-for-like clothing sales for the latest quarter, citing unseasonal conditions and availability issues. This was worse than the 5.5% decline expected by the most pessimistic City analysts.
The retailer has recorded only one quarterly increase in clothing sales in the past five years, having lost out to rivals including Next, Zara and Primark. However, its chairman, Robert Swannell, insisted there had been no pressure from shareholders for Bolland to go.
Food sales were better than expected in the last quarter, up 0.4% in the 13 weeks to 26 December, as the retailer recorded its best ever Christmas. Analysts had forecast no growth, but the improvement was a stark contrast to the 1.4% decline revealed by Waitrose on Wednesday. Food sales at M&S have risen for 25 consecutive quarters on a like-for-like basis.
M&S shares fell 1% when the stock exchange opened but soon turned positive, trading 0.6% higher, as traders digested the news of Bolland’s departure and the poor trading figures.
Bolland said: “M&S had an excellent Christmas in food, delivering record Christmas sales and strongly outperforming the market. General merchandise sales were disappointing. We continued to prioritise gross margin and held back from the heavy discounting seen across the market in the run up to Christmas. As a result we now expect general merchandise gross margin to be at the top end of the guided range.”
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The retailer blamed its poor sales on the unusually mild weather which put shoppers off buying winter clothes. It also blamed availability problems.
However, M&S said it held back from the heavy price cutting carried out by rivals from Black Friday and throughout December. It admitted that more needs to be done to address the disappointing clothing sales, and said the new team would focus on three key priorities: availability, ranging and design.
Analysts were disappointed by the numbers. James McGregor, partner at Retail Remedy retail consultants, said: “Marks & Spencer general merchandise sales suffered from poor availability but also from lower demand due to the unseasonably warm weather. Something doesn’t quite add up there. Wrong stock, wrong place, wrong time?”
Joshua Raymond, chief marketing officer at broker XTB.com, described the 5.8% drop in general merchandise as “simply awful”.
He said: “The headline will be the departure of CEO Marc Bolland after a highly volatile last few years as the boss of M&S. When you look at their recent results, its easy to understand why Bolland had to go and the tough job his replacement, Mr Rowe now finds himself in.”
Rowe will be paid a salary of £810,000, less than Bolland’s last disclosed salary of £975,000 for 2014-15. The new CEO will receive the same variable financial incentives as his predecessor but all other terms, including his pension allowance, remain unchanged.
Analysts welcomed Rowe’s appointment. Clive Black at Shore Capital described Bolland as “ a distinguished commercial statesman” who had done a lot of work behind the shopfronts to modernise the M&S business.
Black added: “His successor from April, the excellent Steve Rowe, has a much stronger platform with which to take the business forward than Mr Bolland inherited.”
