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New M&S boss Steve Rowe brands latest clothing sales fall 'unsatisfactory' New M&S boss brands latest clothing sales fall 'unsatisfactory'
(about 1 hour later)
Marks & Spencer’s new boss Steve Rowe said the performance of the retailer’s core clothing division was “unsatisfactory” as he unveiled yet another fall in sales.Marks & Spencer’s new boss Steve Rowe said the performance of the retailer’s core clothing division was “unsatisfactory” as he unveiled yet another fall in sales.
Clothing sales have grown in only one quarter over the past five years and, in his first presentation to the City as chief executive, Rowe said improving the business was his “No1 priority,” Clothing sales have grown in only one quarter over the past five years and, in his first presentation to the City as chief executive, Rowe said improving the business was his “No1 priority.” He is reviewing M&S’s stable of clothing brands which includes Per Una, Indigo, Limited and Autograph, and has already taken action by cutting some prices to bring the retailer into line with high street rivals.
Related: From Saturday boy to big boss: M&S chief finds lessons in hometown storeRelated: From Saturday boy to big boss: M&S chief finds lessons in hometown store
Like-for-like clothing and home sales were down by 2.7% in the 13 weeks to 26 March, although this was better than the declines of more than 3% expected by analysts. On the food side, although sales were flat the group said it had increased market share. “Our priority is fixing clothing,” said Rowe, who reiterated he is “personally committed to working with the team to get this right”.
M&S said it reduced the proportion of sales on discount and its margins improved. Its spring/summer ranges launched with a lot more stock than last year. “The [clothing] team has sat down and given itself a number of exam questions,” he said. “We’ve not been as stylish as we need to be, not had the availability and need to make sure we have the right product at the right price.”
Rowe said: “Although the sales decline in clothing and home was lower than last quarter, our performance remains unsatisfactory and there is still more we need to do. Rowe successfully ran the chain’s food business and was handed the role of head of general merchandise last July.
“Turning around our clothing and home business by improving our customer offer is our No1 priority. I will update you on my thoughts on the business in May.” Like-for-like clothing and home sales were down by 2.7% in the 13 weeks to 26 March, although this was better than the decline of more than 3% expected by analysts. On the food side, although sales were flat M&S said the division outperformed the market and expanded its market share to 4.3%, after opening 80 stores and launching 400 new lines.
Rowe, who took charge on Saturday from outgoing CEO Marc Bolland, will retain personal control of the troubled clothing and home division he had been running before his promotion. Rowe revealed he had cut the price of 300 women and men’s spring clothing lines by 10-15%. Examples included black jeggings reduced by £2 to £17.50 and a mens white T-shirt reduced from £7.50 to £6. The average price of its main spring womenswear collection is £35, down from £40 a year ago, he added.
Rowe said the retailer was working on improving its ranges and design. He said sales in its Autograph collection were up 10%. M&S also ran 40% fewer clothing promotions in stores and online during the quarter, helping to boost profit margins which will now be at the top end of City expectations. Rowe said the retailer was working on improving its ranges and design. He said sales in its Autograph collection were up 10%. Its spring/summer ranges also launched with a lot more stock than last year.
The food business was flat on a like-for-like basis, worse than the 0.3% growth forecast by the City. However, M&S said the division outperformed the market and expanded its market share to 4.3%, after opening 80 new stores and launching 400 new lines. Shore Capital analyst Clive Black described Rowe as a “force for good”. “Fixing M&S’ general merchandise conundrum, notably the sustained brand corrosion, will not be an easy or quick process,” he said.
James McGregor, partner at Retail Remedy retail consultants, said he had a “good feeling” about Rowe, who has spent time in stores. “While some stores are modern, light and inviting some are still stuck in a time that fashion and modern retailing forgot. “The solutions revolve around product, merchandising, marketing and price to the extent that M&S can engineer positive change that delivers sustainable same-store and then trading profit growth.
“We can expect Steve Rowe to ‘kitchen sink’ the M&S full-year results in May leaving him with a clean sheet with which to start his tenure as CEO.” “We struggle to see this process of change involving a mere Elastoplast,” warned Black. “So some surgery may feature when the time comes to update the market on M&S’ next chapter for development.”
Rowe – whose father was a director of M&S until 2000 - will give a more detailed insight into his turnaround plans at its full-year results next month but he has already given some early clues to his management style.
He told staff that he is a “big believer in keeping things simple”. He said: “One of the things that I have learnt during my time at M&S is that we have a tendency to over-complicate things. Doing things simply means we serve customers better, manage costs, and work more efficiently.”