Yahoo Finance Marks and Spencer 'slaughtering sacred cows' as it bids to turn round troubled brand
Marks and Spencer will speed up store closures as it continues to “slaughter sacred cows” in an effort to turn round the troubled brand.
M&S, Britain’s largest clothing retailer, also said it would accelerate the relocation and downsizing of other stores – part of chief executive’s Steve Rowe’s five-year turnaround plan that is set to initially dent profits.
And, Rowe said that while it planned to grow its food business, it would slow down openings of standalone Simply Food stores.
MORE: Consumer squeeze and competition curb Sainsbury’s sales growth
Rowe, who became CEO in April last year, said its food prices needed to be more competitive in a tough market, while both ranges and availability needed to improve.
He denied the latest changes were a direct result of retail veteran Archie Norman joining as chairman in September.
Norman, noted for turnarounds during his career including at Asda and ITV, said the 133-year old M&S had been “drifting, unfulfilling its customer promise” for 15 years, failing to deliver the pace of change required.
He praised Rowe for “grasping nettles and slaughtering some sacred cows” over the last 18 months.
“This is our moment to start doing it,” Norman said.
“The genesis of any turnaround starts with the recognition of the unvarnished truth – the unsparing statement of where you stand today, where the competition is, what the challenge is ahead,” he said.
Norman said that because of Rowe’s actions “we no longer have a hemorrhaging business”.
MORE: New Burberry CEO to take label further up-market, shares dive on cost
The update came as M&S reported underlying pre-tax profits down 5% at £219.1m for the six months to 30 September. Like-for-like food sales were down 0.1%, and clothing was also flat.
The stumbling food sales will be of particular concern as that has been one area of business M&S could rely on in the past for growth.
MORE: See what posh nosh upmarket magazine Tatler selects from Aldi and Lidl
Bargain supermarkets such as Aldi and Lidl have been pushing hard their high-end foods at cheap prices – and the quality has been appreciated not only by consumers but by the numerous awards and praise industry experts have been lavishing on them.
“The headwinds facing our food business have intensified as competitors have encroached on some of our space with the rapid growth of convenience,” said Rowe.
“Hard-pressed consumers are more aware of value and are careful about premium choices.”
