M&S shares slump 9% on longer overhaul

A warning from Marks & Spencer’s new boss of a short-term profit hit from efforts to turn around its clothing business by cutting prices and improving ranges knocked its shares yesterday. 

Steve Rowe, a 26-year M&S veteran, replaced Marc Bolland as chief executive of the 132-year-old UK retailer last month with a remit to revive clothing, which contributes about 60% of profit but has seen five years of falling sales.

Mr Rowe said he would focus on M&S’s most loyal customer, a 50-year-old woman he called “Mrs M&S”, who had been neglected in the chase for younger shoppers.

The warning that it would take time for customers to notice the improvements and return to M&S stores to buy products other than its successful food ranges, combined with the impact on its margin forecast shocked some investors, who experienced several such “turnaround” plans during Mr Bolland’s six years in charge.

M&S, which has long been Britain’s biggest clothing retailer, has seen its sales eroded by rivals like Next and a push from supermarkets into family clothing while younger shoppers favour Primark and H&M’s cheap prices and more fashionable clothes or online stores like Asos.

Mr Rowe’s plan is to focus on improvements to the quality, fit and availability of M&S’s ranges, while lowering prices and reducing the proportion of sales on promotion.

Together with difficult trading conditions this “will have an adverse effect on profit in the short term” he said.

M&S shares traded almost 9% lower at 405p at one stage yesterday.