I cannot believe I am alone in being slightly suspicious of the ‘M&S Has Turned the Corner’ and ‘Marc Bolland Walks on Water’ headlines this morning. We’ve all been waiting for some good news from M&S for so long that hacks can be excused for jumping the gun. It’s amazing that there is so much residual good will towards the Old Lady of UK retailing that even grizzled journos give her the benefit of the doubt.
My scepticism is not without foundation. Profits have crept up to £661m but they are still way lower than they were a few years ago. It was 2009 when Sir Stuart Rose - the last M&S chief to have found ‘the answer’ - was dubbed the ‘billion dollar man’ when he presented shareholders with profits of more than £1bn in his penultimate year in charge. But dear old Sir Richard Greenbury had got them north of £1bn way back in 1997, and in those days a billion meant a billion. By comparison with today’s hyper-competitive landscape, life in the mid-market was a lot more comfortable then than now.
Those who don’t have to eat their sandwiches every day still drool over M&S food and it appears to be just about fine. But the truth is that despite a minor uptick in womenswear, M&S clothing is still a right old mess, as any fule kno. It does not know where it is positioned - just ask any woman. Primark, TKMaxx, H&M and Zara continue to knock it all over the court, although I will say that I had a look at their dresses for my six year old daughter the other day and the kids stuff is very nice indeed.
I’ve also tried their online offering and it’s now pretty good - picking stuff up at any branch works very well indeed. But I’m with the FT this morning in speculating that Bolland may have pulled all the number stops out to allow himself a semi-dignified exit. Retired hurt but not pole-axed on the canvas. One should not begrudge him this - he is a decent and civilised man who has done his best. He joined Coke last year as a non-executive director and there is another organisation sorely in need of a big rethink.
The whole retail sector remains under intense pressure. Around Easter I received a nice set of money-off vouchers from Waitrose, which must have more than kissed goodbye to any margin they may have made out of me. The agony for bricks and mortar retailers in the UK is very far from over. And now we’re officially in deflation trying to raise prices is a near impossibility.
What I suspect is going on is that retailers are doing the usual - doubling down on their suppliers, making life even more desperate for the weaker members of the supply chain who simply cannot fight back. M&S has done precisely this by bringing in a couple of ex-Next Hong Kong heavyweights, Mark and Neal Lindsey, with their digital knuckle dusters. But M&S needs more than this - it requires the vision thing big time. Someone like Philip Green wouldn’t bid for it in a million years now.