After years of speculation about his future, Marks & Spencer boss Mark Bolland has thrown in the (luxury Egyptian cotton) towel. Today the retailer announced that Bolland is planning to retire in April.
Bolland’s legacy is one of extremes. He has totally failed to reverse the declining popularity of M&S’s clothes. There were signs he was on to something last year when the retailer cited a much talked-about suede skirt as evidence it was ‘bang on trend’, and like-for-like sales in its general merchandise (GM – clothes and homewares) division crept up by 0.7%.
That pushed shares in M&S to a seven-year high, but the jubilation didn’t last. Today the company announced that GM sales dived another 5% in the 13 weeks to December 26 and 5.8% on a like-for-like basis. Not so bang on trend anymore. His efforts to make the division more profitable have paid off somewhat. But according to Standard & Poor's estimates published in the FT yesterday, M&S is on track to end the financial year with a margin of just 6.5%, compared to rival Next's 20% (a figure that's admittedly skewed somewhat by the fact M&S is also in the food business).
The former Morrisons boss can take some credit for the massive growth of M&S’s food division. At a time when most major grocers are in decline, the company’s upmarket ready meals and sandwiches have brought lots of punters through the doors. Food sales increased by 3.7% in the period, a figure the bosses of Tesco, Morrisons or Asda (and even Waitrose) would currently trade their own mother for.
There’s inevitable speculation over whether Bolland jumped or was pushed. The Dutchman said he had made the board aware of his decision to leave the role last summer, and chairman Robert Swannell said Bolland had been under no pressure to jump ship. 'Categorically he was not pushed, 100%,' Swannell told The BBC's Radio 5 Live. 'This was a decision we reached together and I'm glad to say it's been a great partnership.'
But the official account conflicts with an October report by the Telegraph that Bolland was planning to stick around for another two years. M&S’s shares were up 1.48% to 445.20p this morning, suggesting investors welcomed Bolland’s departure (they surely can’t have welcomed such troublesome trading figures...).
Bolland’s successor Steve Rowe (not Steve Steveson?) has his work cut out. He’s been with M&S for 25 years and has been running GM since summer, when he was moved across from the same role in the company’s food division. That does rather imply he was being trained up ahead of promotion to the top job.
It’s not just clothes that Rowe has to sort out. M&S food’s growth has partly been on the back of opening new stores. Excluding these, its growth in the period was just 0.4% - not bad compared to its peers, but not enough to carry its struggling GM division in the long-term.
At the time of writing, M&S’s shares had dipped below their opening price and were down almost 1% on where they closed yesterday. Bolland’s departure may have been desirable for some investors, but it far from guarantees a turnaround in the company’s fortunes.