The MT Interview: Stuart Rose

His company is the highest riser in MT's Most Admired poll, but Marks & Spencer's CEO won't call it a turnaround - he knows the frailty of any recovery. The sparkling figures, he says, have been achieved by a sound team rigorously applying old tenets of retailing.

by Chris Blackhurst
Last Updated: 06 Nov 2012

Why did they take the head office of Marks & Spencer and dump it in one of the most soulless parts of London it's possible to find? Of course, there was plenty wrong with the old Baker Street HQ: overcrowded, rambling, obsolete, resembling more a branch of Whitehall than the powerbase of an aggressive, up-to-the-minute retailer. But this - I think, looking at the glass-and-steel complex that has replaced it - is monstrous.

It's my first visit to Paddington Basin (how seductive that sounds) since the move. It's hard by an arterial road thundering out of London. It's an unremittingly dull landscape. This is an office block stuck in the middle of nowhere. Shops and the nearest M&S branch are at Edgware Road, a short walk away. Oxford Street and Marble Arch, where the group has its flagship store, it is not.It's so cut off that management are running free shuttles back to civilisation.

I check in, grab myself an M&S coffee from the machine and plonk myself down. I have to report it's one of the finest cups of coffee I've ever had in a corporate tower (M&S can be relied on to do some things extremely well). As I wait for Stuart Rose, the group's chief executive, to arrive, I realise that despite the surroundings, there is a real buzz. 'Tell him I'll do three,' barks a tieless man into a mobile. A woman paces up and down nervously, possibly here for a job interview. Some young suppliers enthusiastically check on their samples.

I'm shown up to the executive floor, in the express lift. Rose's assistant asks me if I don't mind see-through, vertical-drop elevators. Have I got a choice? She says there's an enclosed one over the other side of the complex. What sort of place is this, where visitors have to be asked if they suffer from a phobia? Do planners never think?

At the top, more waiting. I've got the new, stylish M&S gifts catalogue to browse through and, on the walls, oil portraits of the three men who made the great modern M&S to observe: Marcus Sieff, Rick Greenbury and Derek Rayner. Of the more recent bosses - Luc Vandevelde and Roger Holmes - there's no sign, even though they were the ones who decided to relocate here. It's a little incongruous, this gilt-framed art in a place so earnestly up-to-date.

It was typical of those two to drive through the move, to choose somewhere so achingly modern and depressingly functional, away from the nation's shopping heartland in Oxford Street and far removed from the customers. I make a note to ask Rose what he thinks.

After some minutes, he bounds in. He's wirier than I remember but, as ever, poised and immaculately turned out. He apologises for the size of his office. It's small, with a desk at one end and a meeting table at the other. On the wall are newspaper cartoons recording the store group's rollercoaster ride these past few years. He too is drinking coffee from the machine.

Glancing outside at the open-plan executive floor, I'm struck by the informality and by the relative youth of many of those present - the way they casually perch on each other's desks for a chat, the constant coming and going. The contrast with Baker Street, where senior management operated behind closed doors, is marked.

Rose has agreed to see me ahead of what are likely to be sparkling results. He can't discuss them but his mood is buoyant. (It transpires that the six-month profits to 30 September are up a whopping 32%, to £405 million, and the share price roars through 700p. It's little more than two years since Philip Green was lining up a bid of 400p. Symbolically, the firm is heading back to the heights it reached under Greenbury, with predicted annual earnings of £1 billion.)

How has he done it? What's the trick? Rose shakes his head and smiles. 'You know, I never doubted for a second the brand was capable of reorganisation. I knew what it could do and what we could wring from it.' And he's now second-Most Admired business leader in the land.

Yet he's refusing to celebrate, unable to commit himself to the one word that sums up the transformation. 'I'm loathe to say "turnaround".' It's only two years since the chain was at rock-bottom; he knows that success, however spectacular, is also fragile.

He's keen not to seem triumphalist. 'It's not about one person, it's about teams of people. We've got 85,000 in this organisation. They're all responsible for our success.' He checks himself. 'But I have to acknowledge we're doing well. It's become a mantra of mine that we're now getting back more than we're delivering.'

So how's he done it? He smiles. 'There is no strategy. We're simple shopkeepers whose job is to satisfy customers.' Before I can say, yeah, pull the other one, he adds: 'It has been about three key words - product, service, environment - and five words that describe what we do: quality, value, service, innovation and trust. I dusted those words off when I came in 2004.'

He continues: 'They're words that had huge resonance for Marks & Spencer in the past. The big question was: did they have the same resonance in 2004? They did, because they're words staff and customers understand - eight words in total to describe how we drive the business, how we drive those responsible for the product.'

He's a great believer in going back to basics. 'M&S is about three things - the product, the shops, the delivery of our service. Nothing else.'

To that end, he pared down the management. 'We took out the whole board - we got rid of the stores chief, the personnel director and others. We'd had an exciting battle with Philip (Green) but, after it, we reduced the board to 12 non-executive directors and three executive directors. That's it.'

The key three were himself, Steven Sharp and Charles Wilson, long-time Rose lieutenants. Sharp was brought in to oversee advertising and marketing, Wilson to take charge of organisation and systems. Wilson has since left to go to Booker. Rose insists it was all entirely friendly - they still see each other. 'Charles came with a job to do, and he wanted to get back to the undergrowth of cash-and-carry, which he loves. He treated it very much as a project.'

Alison Reed, the finance director, also left, to be replaced by Ian Dyson. This now is the triumvirate: Rose, Sharp and Dyson. He points to the table. 'We sit here and we take decisions very fast. Compared with the old M&S, we've cut out the jaw-jaw. Everything goes straight down the line. So we say to menswear, for example: "You signed up for it, now go and do it." We're a very small executive team, just three of us.' He nods to the rooms on either side. Sharp, the marketing director, is in one, Dyson, finance, the other. 'We're supported by a strong team of divisional heads, but it's very different from the old M&S.'

It's often forgotten that Rose worked at M&S before heading off to make his fortune elsewhere. It suited Green and others to question his prowess when he went back - he was portrayed as more 'Fancy Dan, ladies' man', a meeter and greeter rather than an intuitive, roll-your-sleeves-up trader - but Rose had been round the block, both inside M&S and outside. It's true that he was in the right place at the right time when Green alighted on Arcadia in 2002 and did a deal to buy the business that netted Rose £25 million personally. But before that, he'd been one of three, along with Terry Green and John Hoerner, who sorted out what he describes as the 'pile of shit' that was Burton, and he'd worked at Argos and Booker, albeit briefly.

Crucially, his first job had been as a trainee at M&S in its glory days. He stayed there 17 years, rising to senior executive level before heading for Burton. He wanted to go back to M&S, yet he was full of hunger. He may have millions in the bank and keep a wine collection to die for, fly his own plane and look like a model from one of his collections for the well-off man of a certain age, but comforts are not what motivate him.

Philip Green, though, says Rose is pushed by money and that for all his success, it's not enough. Rose is still a manager, as opposed to an owner, and hasn't made billions like Green. One Green charge is that when he bought out Arcadia, Rose never hit back with his own counter-bid. Rose could have gone to a Permira and persuaded it to back him, and if he'd done so, it might well have been Rose counting a mountain of money in Monaco today instead of Green.

He's heard it all before from Green. The Bhs boss regarded it as a betrayal, when, having told Rose of his takeover plans in 2004, Rose took the job of CEO at Green's target company. But they have kissed and made up since and stay on good terms - not blood brothers exactly but friendly, respectful and joshing. Rose raises his eyes to the ceiling. 'It's true that in Philip's terms I've made only a very modest amount of money. But compared to the man in the street, I'm very well off. Philip is a good egg, a good businessman. He's very money-centric. I'm different. It's a difference that has defined the way we've gone.

'It's about how I feel about myself,' he adds. 'Do I feel good? Yes, I do. Money is not what gets me out of bed in the morning. Listen, there's nobody, if they're a retailer, who wouldn't want to be chief executive of Marks & Spencer. It's an iconic job - one of the best in the land.'

Outwardly a bit of a dandy - he really does sign autographs for the ladies behind the tills - he is actually highly driven. It stems, he admits, from when his mother committed suicide. 'It's 30 years ago today since my Mum died,' he volunteers. His lips are pursed, the emotions still raw. 'She would have been proud of me having a chance to run M&S for a while, she'd have been proud.'

He leans forward. 'Don't get me wrong - I'm not mawkish about her killing herself. I think there's a terrible stigma attached to suicide and there shouldn't be. It did wake me up, made me think: what are you doing with your life? But I did it for myself, not for her.'

It may be a post laden with prestige, I suggest, but M&S was a basketcase. He nods. 'The first thing I resolved was to build a great team and ensure M&S never has a blip again.' He rattles off statistics to tell the story. 'In 1996, M&S had the second-largest market capitalisation of any retailer in the world, at $25 billion. Wal-Mart was number one, at $60 billion. We'd gone to 32nd and still at $25 billion, while Wal-Mart had gone on to $300 billion ...' He hesitates for effect: 'And all that decline was self-inflicted.'

So where did his immediate predecessors go wrong? 'The business failed to look out of the window. Every day as a shopkeeper you have to do some shopkeeping. By the time it did, the world had passed it by.'

They screwed up in all sorts of areas. 'They failed to see the impact of deflation. Everybody was putting their prices down. There was no value in M&S any more.' They didn't go out of town, they weren't fast enough with their fashion. It was as if nothing had changed - except of course, the market had changed.

'You know, Marcus, Rick and Derek - they would have fixed it in a month.' He omits to mention Vandevelde, Holmes and the others who came after the Big Three. He doesn't need to - it's obvious what he thinks. 'Shall we say, the change of management meant we were too internally focused.' He grins. 'But I am eternally grateful the management wasn't so bad they did reckless things. Look at Sir Ralph Halpern (the former boss of Arcadia). He sold the family silver. He exchanged the security of assets for upward rent reviews and the business was doomed.'

Despite its difficulties, M&S never once wavered from retaining its freehold estate. 'We're an owner of properties. It's like the payback to shareholders, it's another refuge of desperate management. We won't do that, we want to invest in our stores.'

A common complaint about M&S is that many of its shops remain badly lit, poorly laid-out and uninspiring. He puts his hands up. 'We own more stores than anyone else, but we're also like Debenhams in that we've got bigger sites. We're spending £80-£90 per square foot on a 50,000sq ft store. They've all got to be prepped for food as well; that requires cabling, fridges, loading bays. We can't do them for £10-£20 per square foot - they're not boxed supermarkets.'

His target is 65% refurbished by Christmas 2007. 'We simply don't have enough resource to do them all in one go. I'm resolved that the shops will never be under-invested in again. We should aim to renew each store every six years - that's 400 a year.' In the old M&S, there was a belief that you could never shut a store. 'I closed five last year and nobody noticed. I'm also adding to space as well, so net, net there will be a gain.'

The state of the stores was just one of the horrors that Rose found on his return. Indeed, so bad was it that there were rumours that he was thinking of quitting or that all Green had to do was offer a decent price and M&S would be his.

Not true, says Rose. He owed it to the staff to stay. 'I had 85,000 people not knowing if they were heading north, south, east or west. This is a good business; it would have been childish to have done anything else. Now we're actually going somewhere, it feels like a huge privilege.'

As a trainee, he was brought up on the M&S way of doing things at a time when it was in its pomp, before the company lost its way. He knows the position of esteem the brand occupied in the British psyche, especially among women. The 'Your M&S' campaign was a direct response to the faith of customers and investors in the face of Green's attack. The fightback was turned into a shared, cathartic experience.

Those ads and the Twiggy and Bryan Ferry campaigns have been cited as planks in the resurgence, but Rose points out that they could not have succeeded if the product had not been right in the first place. 'There's no point in promoting unless the product stands scrutiny - you can sell a great product in lousy stores; you can't sell a lousy product in great stores.'

Value for money was key. Rose and his team looked back at 1997-98, when M&S was last successful, and discovered almost a quarter of products were 'opening price points' - cheap, intended to get people into the shops. It had fallen to slightly over 10%. Now it's 25%. Overstocking has been eliminated, a sackable offence in Rose's eyes. And no excuses about unseasonal temperatures. 'Weather is for wimps,' he says.

Suppliers were sat down and made to accept tighter deals. He kept it simple, telling staff: 'We buy for 50p, we sell for £1. That's all we have to do.' He took M&S into the unheard-of territory of fast fashion (master: one P Green). M&S now has a fabric pool in Turkey, which means it can design, manufacture and get products on sale in seven weeks - standard for Topshop, New Look and Zara but revolutionary for M&S.

He lost Wilson. He also lost Paul Myners as chairman. One director alleged that Myners and he were too friendly. After a public row, Myners went - but not before Rose had secured for him a year's extension. 'The whole episode was extremely stressful, personally. It put back the morale we were building by at least three months - that's why I called a halt and reached a compromise by proposing he stay the extra year.'

There have been claims he doesn't see eye to eye with his new chairman, Lord Burns. 'That's not true. I saw no reason for the change but I'm very happy with the result of that change.'

He hung onto George Davies, the temperamental genius behind M&S's Per Una range, but it took all his charm to persuade him to stay. He doesn't know for how long - 'next year, at least' - but Davies is still there. 'Do you know George? When he's good he's fabulously good and when he's bad, by God he's difficult.'

Once the clothing and the food had been improved, the advertising began. He stuck with Rainey Kelly Campbell Roalfe/Y&R, the agency behind the infamous 2000 'I'm normal' ad of a naked size 16 woman running up a hill. But in place of that baffling ad was Twiggy wearing clothes. She was part of a marketing blitz through which M&S asserted its confidence, even managing to make chocolate puddings appear sexy. Ads stressing organic content and fair trade under the strapline 'Not just food, M&S food' played to traditional virtues.

So confident is Rose that the talk is of growth, of more Simply Food outlets, of expansion abroad. M&S had outlets overseas but the previous lot closed them. Now Rose wants to go back, to France and Spain initially. But he's also thinking global, of India and the Far East - and of 'stretching the brand'. He wants to pitch into electrical goods and cameras, aiming deliberately at one of the firms that has prospered from M&S's woes: John Lewis. 'No-one else has their trust,' he says. 'No one else, except us.'

He won't let M&S be drawn down the price-only route. 'We don't just trade on price alone but price times quality times styling. We don't want fleeces at knockdown prices - that's not what our customers want from us.' Nor will he let the group chase the younger customer at the expense of others. 'That's not what we're about. We're about eight to 80, Christian and Jew, fat and thin. We want to deliver to all of them.'

What of Rose himself? 'I'm not 42 and chief executive of M&S, I'm 57 and chief executive of M&S. I've had to do it the long way round ... Mind you,' he adds, 'I wouldn't have got here if I'd stayed at M&S - I'm neither barrow boy nor Harrow boy.' And he loves it. 'The customers are Middle England, I'm Middle England.'

He sees my look of disbelief. 'I made £25 million when we sold Arcadia. I paid full tax, so I took home £15 million. I've got two homes - one in Suffolk and the other rented. I do fly a plane but it's a £125,000 plane, not a Gulfstream.'

It is, though, exhausting. 'I'm here before 8 and will be here until 6.30. I normally have a business dinner - and I mean business. I also go round the stores, but if I go to Newcastle, say, that's a full day's trip.' He visits on his own, unannounced - unlike the ex-bosses. 'They did royal tours with entourages, and the manager would come out on to the pavement to greet them and show them round. I just walk in off the street, same as any customer.'

He is, he says, 'working harder now at 57 than I worked in the first 25 years of my life'. But the job is changing. 'We've got the bench strength up, now it's about building a team.'

What of succession? 'I'm not thinking about it yet. I said I'd do five years, I've done just short of three. I'll definitely stay on until 60 - pray God I stay fit and have still got the imagination and the energy. We've got a good team of people and lots of opportunities.'

And this building? He raises his arms in defeat. 'I would have stayed where we were. It's a 20-year lease so we can't move. You can't walk to Marble Arch. I would have moved out of Baker Street into rented space, done it up and moved back.' I guessed as much. But what is done is done. There is no going back now


1. To maintain M&S's recovery
2. To extend the brand and take back the ground lost to John Lewis
3. To expand overseas successfully (unlike last time)
4. To leave a successor with a solid, lasting legacy


1949: Born 17 March. Educated Bootham School, York
1972: Trainee, Marks & Spencer
1987: Made commercial executive, Europe, for M&S - based in Paris
1989: Joined Debenhams
1991: Appointed head of Evans, later runs Dorothy Perkins
1998: CEO, Argos, then runs Booker
2000: CEO, Arcadia
2002: Leaves as Arcadia is sold to Philip Green
2004: CEO, M&S

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