M&S boss Steve Rowe hopes to draw line under decade of deteriorating performance with promise of ‘accelerating change’
Marks & Spencer executive Steve Rowe will this week attempt to draw a line under a decade of deteriorating performance at the retailer with the promise of ‘accelerating change’.
He is expected to use Wednesday’s full-year results meeting to demonstrate that the chain has a credible blueprint to battle larger rivals such as Sainsbury’s and Tesco on food.
M&S, which gets more than half of its £10 billion revenue from selling food, is expected to reveal an 11 per cent dip in profit to £519 million in the year to March.
Looking ahead: Steve Rowe is hoping to demonstrate M&S has a credible blueprint to compete
Like-for-like food sales for the full year will decline by 2.4 per cent while clothing and home sales are expected to drop by 1.4 per cent.
In response, Rowe is expected to give more details of how M&S can capitalise on the momentum in the business after it struck a landmark deal with food delivery firm Ocado in February, as first revealed by The Mail on Sunday.
That will include appealing to a wider customer base – especially families – by having more stores with a bigger range of groceries.
He will also outline how far the company has cut back prices in recent months.
It is understood Rowe will frame M&S as a company that wants to be ‘Britain’s fastest changing retailer’ in an effort to break with the past.Wednesday will be about reassuring shareholders and staff about the pace of change, not just the bottom line, although that is important too,’ said a source.
Senior M&S figures are understood to have drawn up confidential plans to double the company’s food market share in the next five years.
Ocado investors are scheduled to vote on the agreement with M&S at a meeting tomorrow.
M&S is also likely to provide more details of its plan to raise £600 million from investors to finance the deal.
The company has long been accused of taking decisions too slowly and being risk averse. Adam Cochrane, an analyst at M&S’s joint broker Citi, said in a report last week: ‘M&S has been on the verge of becoming a ‘retail dinosaur’ – once dominant but in danger of becoming extinct – for a number of years.
‘But there has been a much more radical change in terms of the operational management teams and an acceptance that change is required.
‘With new, external appointments we think this is increasing the willingness, ability and speed of change. This is hard to quantify but reflects an important inflection point in our view.’ One M&S source said: ‘There are a lot of changes in the ways of working and attitudes. It’s beginning. It’s happening now in waves rather than a tidal wave but it is beginning to happen.’
Chairman Archie Norman said in an interview in 2011, when he was chairman of ITV, that the key to transforming a company was ‘fracturing the old culture’.
‘You look for those 5,000-volt shocks that send a frisson around the whole company, and you get everybody talking and saying, ‘Wow, this leadership really means it…it really is different now.’ ‘
- Ocado boss Tim Steiner says his American supermarket partner Kroger has ambitious plans ‘to cover the whole country’ with the delivery service.
Kroger has so far opened just three Ocado distribution centres since launching on the other side of the Atlantic last year.
But the company plans to be running 20 depots in the future.
Steiner, speaking at the World Retail Congress in Amsterdam last week, said that whether Kroger ‘opens 20 or 50’ depots in the next three years, the company’s team has a clear ambition to ‘win in e-commerce in the US’ – defeating Amazon and other retail giants such as Wal-Mart.