“The general merchandise business is absolutely a lot healthier in design, sourcing, quality and margin than it ever was before,” said outgoing Marks & Spencer chief executive Marc Bolland this morning, as he announced he is handing over the baton to current executive director of general merchandise Steve Rowe in April this year.
“I’m not here to praise myself but if you look at what we have achieved, we have 80% of the infrastructure we need [to fix the declines in M&S’s clothing business],” he said.
On a conference call, Bolland said that when he joined the business in 2010, he inherited Plan 2020, which included the overhaul of M&S’s logistics, IT, structures and stores.
“It is barely 2016 and we are about 80% of the way through.”
He added: “We will see over the next quarters the merits of that and if it is a little bit after my time then I’m pleased for the company. I don’t mind being the man to pull the horses.”
His announcement came as M&S reported its GM sales fell by 5% for the 13 weeks ending December 26, as like-for-like sales fell 5.8% due to unseasonal conditions and problems with availability.
When asked if he was disappointed to be leaving without having fixed the general merchandise business, he said: “It needs to be fixed in three ways: in its supply chain, which I think has been largely fixed; margin, which has improved; and the third thing is sales, which have not increased for the quarter. It would have been nice for this moment, but I think the other two things are important too.”
Chief financial officer Helen Weir said there were three key factors for the disappointing performance of GM.
“First there was the very warm unseasonal weather we had through the period, which was a key element that impacted us and the sector as a whole. Secondly, we have for some time talked about our strategy to focus less on promotional sales and more on full price,” she said.
“Our competitors had Sales, their windows were red with Sales of 50, 60 and up to 70% off in the two or three weeks leading up to Christmas and you saw yesterday in the BRC figures, price deflation of 6% in December. Ours were only down by 2-3% so we held back on discounting, which undoubtedly took some off the top line but also enabled us to upgrade our margin guidance so was good for profitability.”
Finally she highlighted issues around availability issues in some areas, particularly with trans-seasonal items in demand later in the season due to the warmer weather.
“One example is the unlined coat range that we had in September and October, which we sold out of in November and December,” she said. “People weren’t buying thick coats because the weather was still warm.”
Bolland said he had always intended his tenure at the helm of the retailer to be between five and six years and chairman Richard Swannell said that he was “absolutely under no pressure” to leave.
Both were insistent that the succession plan had been in discussion for a number of years and praised Rowe, citing his extensive experience at Marks & Spencer gained through 25 years in the business.
“There is terrific support for Steve in his new role,” said Swannell. “He was the outstanding candidate.”
A replacement for Rowe has not yet been appointed, and an announcement is expected for when Rowe starts as chief executive in April.
In the meantime, Bolland said he intends to stay in the UK and will dedicate his time to a “portfolio of activities that combine interesting business interests and those where I can give something back”, such as his current role on the board of Coca-Cola and vice president of Unicef.
“I’m turning 57 and have spent 10 years in the UK retail business and 20 years in manufacturing before that,” he said. “I think I can have a next stage and I don’t want to do that when I’m 66 years old, I want to do that now.”