Wednesday , September 28 2022

Marks & Spencer boss: overhaul of business is 'going bloody fast' | Business


Marks & Spencer boss Steve Rowe said it was leaving "no stone unturned" as a new management line-up overhauls "every aspect" of its struggling clothing and food stores in a bid to appeal to younger shoppers.

After more than a decade of failed attempts to revive the high street giant, Rowe gave a stark assessment of the chain's problems as a small increase in first-half profits. "Confusing" promotions are put off by shoppers, and their clothing arm was an aging "customer base and dated stores.

"Against the background of profound structural change in our industry, we are leaving no stone unturned," said Rowe. "Every aspect of our ranges – how we trade, our supply chain and marketing – is undergoing scrutiny and change. We're going bloody fast, trust me. "

Rowe's comments came as the group reported a 7.1% increase in pretax profits to £ 126.7m in the six months to 29 September. However, group sales declined 3.1% to £ 5bn as it shut 24 stores. Part of a plan to ax 100 branches by 2022. M & S's share price closed down 0.5% at 300p.

The profit figure was depressed by nearly £ 100m of one-off costs. A further £ 11.1m is a corporate culture that was "siloed, slow and hierarchical".

Archie Norman, the turnaround expert who took over as chairman a year ago, insisted that M & S was a business where "things are really beginning to happen", with the figures "roughly what we expected them to be ".

"A lot of it is behind the scenes, the blocking and tackling, the unglamorous things such as supply chain … tackling a legacy that goes back to the decades, "said Norman. "If Steve [Rowe] It was Donald Trump, he would probably be declaring today's results to be a great personal victory, but that is not really quite the way we see it. "

Maplin, Toys R Us, and Jacques Vert are all collapsed in recent months, but several retailers and restaurant groups are facing financial problems and are trying to close stores or negotiate rent cuts.

Gourmet Burger Kitchen: The upmarket burger chain wants to close 17 of its 85 restaurants via an insolvency process known as a company voluntary arrangement (CVA)

House of Fraser: The department store chain is expected to close at 12 stores after being bought by Mike Ashley. It was agreed a CVA under which 31 stores were close, but this lapsed on administration.

Homebase: The DIY chain is closing at least 42 stores after completing a CVA organized by new owner Hilco. The restructuring expert bought the DIY chain for £ 1 from Australia's Wesfarmers who botched an attempt to bring it to the UK.

Poundworld: The discount retailer has closed all its 355 stores, with a loss of 5,100 jobs after falling into administration in June.

Cau: The owner of the Gaucho and Cau steakhouses fell into administration in July. The groups lenders have been bought the 16 Gaucho outlets.

Mothercare: The chain is closing 60 of its 137 outlets after agreeing with a CVA in May. Additional closures in July mean 900 jobs will be lost.

Carluccio's: The Italian chain secured a CVA to close 30 of its 99 restaurants in late May.

New Look: The chain is closing at 85 stores in a restructuring plan. His chairman, Alistair McGeorge, said that the future of the 39 stores was doubtful with talks with landlords continued.

Carpetright: The retailer obtained a CVA in April of close to 92 of its 409 UK stores in September.

Prezzo: In March the Italian-themed restaurant group secured a CVA to close 94 of its 300 restaurants, with the loss of 500 jobs. Rent cuts were agreed on a further 57 locations.

Jamie's Italian: The chain closed six locations in 2017 and this year agreed to a CVA to close a third of its loss-making outlets.

Byron: The upmarket burger chain is closing at 20 of its 67 restaurants after a CVA agreed in January.

Debenhams: The under-pressure department store chain has said it could close up to 50 stores stores and wants to get rid of space at 30 more by bringing in gyms and other services.

M & S: The high street stalwart wants to close 100 outlets – a third of its main stores by 2022 as part of a 'radical transformation' plan.

Clothing sales at stores open for more than one year were down 1.1% hindered by poor stock levels on popular styles. M & S recently hired the Lady of the Morning presenter Holly Willoughby to pick her clothing "must-haves" for the season, but some of the outfits she picked, such as £ 49.50 leopard-print dress, sold out in several sizes within hours.

"We are letting customers down with availability," said Rowe, who last year poached Jill McDonald from Halfords to lead the business. "We have some good products this season and the ranges are improving, but we are still in a position where we are buying too many [clothing] lines. The range is too broad and too shallow. "

Next season M & S will buy more dresses and trousers in sizes eight through 14, but fewer in a 16 and above, in a bid to improve stocks, he said.

Holly Willoughby

Holly Willoughby, the Morning TV presenter and new face of M & S clothing. Photograph: Ken McKay / ITV / Rx / Shutterstock

M & S did not rule out further store closures as third of the retailer's 1,029 stores date from before the second world war and some are located on ailing high streets. Rowe said: "We will not pause at 100. We have got to make sure that M & S is relevant and fit for the future."

The retailer also has a lot of redevelopment options for another 80 of its older stores, some of which are freehold sites.

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M & S's previous reliable food business is also in trouble, with 2.9% in a competitive grocery market. His food halls had become "excessively dependent" on short-term promotions and multi-buys such as the popular but unprofitable "Dine In" deal, Rowe said.

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Tom Stevenson of Fidelity Personal Investing said: "Reading through M & S is like taking a cold shower. The company is ruthlessly honest about the massive challenge it faces. Sales is still declining, in the context of which flat profits are not a bad result. "

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