M&S Sourcing Chiefs 'To Quit Next Year'

The brothers parachuted into Marks & Spencer (Other OTC: MAKSF - news) to boost profit margins in its clothing business are expected to leave the company next year as part of an ongoing shake-up led by its new boss.

Sky News understands that M&S' chief executive, Steve Rowe, is in the early stages of reviewing whether the contracts of Mark Lindsey and his brother Neal should be extended when they expire next spring.

Although a decision has yet to be taken by either the company or the Lindseys, sources said it was "highly likely" they would step down during the course of 2017.

Their departure would be significant because it would imply that M&S has eked out the majority of the potential cost-savings generated by improving the efficiency of the retailer's supply chain.

Insiders said it would also highlight a greater confidence among Mr Rowe's top team that the company has built a more successful in-house sourcing function.

Later this week, Mr Rowe will announce the conclusions of his initial review of the business after replacing Marc Bolland as M&S' chief executive in April.

Sources say that Mr Rowe will highlight a pressing need to improve the quality of M&S' clothing, with some analysts concerned that the Lindseys' efforts over the last two years may have had detrimental consequences for product quality.

The new chief executive has already illustrated his determination to change the fortunes of M&S' core clothing business by telling colleagues that he will oversee the unit personally rather than appointing a new boss to report to him.

Mr Rowe is expected to outline plans to reduce the number of separate clothing brands used by M&S, with one insider saying: "There will be a real emphasis on reducing duplication.

"He will make it absolutely clear who M&S' core customers are and what we will be doing to serve them better."

Recent margin gains have been a rare bright spot for M&S' clothing unit, which has seen like-for-like sales decline in all but one of the last 18 quarters.

The Lindseys were hired by Mr Bolland and Mr Rowe's predecessor as head of general merchandise, John Dixon, who quit last year.

The brothers were the architects of Next (Other OTC: NXGH - news) 's successful supply chain, being lured out of semi-retirement to join M&S in March 2014.

As the Hong Kong-based sourcing directors for general merchandise, the Lindseys have specific responsibility for clothing and footwear, overseeing M&S' network of regional sourcing offices around the world and its large London-based central sourcing team.

Although little-known in the UK, they played an important role in assisting Next's rise to prominence on the high street.

They are now in line for multimillion pound paydays which could make them the company's best-paid employees over a three-year period.

Sky News revealed last year that Mark and Neal Lindsey are to receive a fixed proportion of the savings generated by the increase in M&S' gross margin, in addition to basic salaries of £400,000 each.

Analysts estimate that gross margin improvements have saved M&S hundreds of millions of pounds during the last two years, with further gains expected to be made over the next 12 months.

M&S has refused to disclose the brothers' remuneration arrangements because they are not on the company's main board, and it declined to comment on whether their contracts would be renewed next year.

M&S shares were trading at just under 442p in afternoon trading on Monday, giving the company a value of £6.98bn.