Marc Bolland is stepping down as boss of M&S in April after six years at the helm. Retail Week looks back at his key milestones.
Having moulded an efficient and enviable supply chain for Next, cutting out middle men and bringing more control over each product in-house, Bolland tasked the Lindsey brothers with replicating those efforts for M&S’s general merchandise division, in March 2014.
Speaking months after their arrival, Bolland hoped the new sourcing strategy would account for about 75% of the increase in profit margins and vowed to increase in-house sourcing to 60% by 2017. It is estimated that the work of the Lindseys will have saved M&S £200m by that time.
The sourcing strategy has transformed the infrastructure of the M&S business and proved one of the biggest contributors to margin gains.
Until 2014, M&S relied on etail titan Amazon to run its website. But as part of Bolland’s multichannel vision, M&S ploughed £1bn into updating its IT and distribution platforms as it adapted to changing consumer demands.
The investment was designed to tackle a shortage of warehouses and gain full control of its website, responding to rival promotions quicker and tailoring offers to customer preferences.
‘The new-look website has been up and running for almost a year and is largely seen as a success’
The new-look website has been up and running for almost a year and is largely seen as a success, as M&S bids to make ecommerce as profitable as stores by 2017.
However, the investment did not reap instant rewards. The overhauled website relaunched in February 2014, but ecommerce sales plunged 8.1% in the quarter that followed.
There was also chaos during the 2014 Black Friday and Christmas peaks as the website struggled to cope with demand and the “unsatisfactory performance” of its distribution centre in Leicestershire caused delays to online deliveries.
But M&S’s online sales surged 20.9% in the 13 weeks to December 26, driven by “strong” customer traffic, underlining the impact of its new website.
Bolland arrived at M&S from supermarket giant Morrisons in May 2010 and instantly turned his attentions to the retailer’s food proposition. The division was seen as the weaker sibling of its general merchandise arm, with Bolland highlighting that M&S’s food sales were “behind Waitrose”.
Days into his role, Bolland removed branded basket staples from the M&S offer and placed his successor as chief executive, Steve Rowe, in charge of transforming the food business, building on the work of John Dixon.
‘Its own-label proposition has enjoyed a rapid rise, becoming renowned for its quality’
Its own-label proposition has enjoyed a rapid rise, becoming renowned for its quality as it emerged as a serious contender to upmarket grocer Waitrose.
The fact that M&S’s like-for-like food sales edged up 0.4% during the crucial Christmas trading period, while Waitrose experienced a 1.4% decline, accentuates how far it has come under Bolland.
Gross margin and share price gains
A major part of Bolland’s strategy at M&S has been to improve margins – a goal centred on improving the quality of its clothing offer, driving full-price sales and improving sourcing.
At M&S’s last update to the City in November, Bolland said the general merchandise division had increased its gross margin by 285 basis points to 56.6%.
Prior to Bolland’s arrival, during the year ending April 3, 2010, gross margin in general merchandise stood at 52.5% – some 410bps behind the level M&S boasted two months ago.
However, that strategic plan hasn’t come without criticism. In the wake of those gains, analysts compared the retailer to WHSmith, owing to its focus on costs and margins to protect profits at the expense of sales growth.
Despite like-for-like sales falling, Bolland’s impact on M&S’s share price was positive – and immediate.
Shares spiked 5% on November 18, 2009, the day he was named as the retailer’s new boss, helping its share price reach 398p heading into 2010.
But in May 2012, M&S revealed its first annual fall in profits for the first time in three years, sending the price down to 329.10p.
Since then it has recovered, reaching 511.5p in September 2013 and hitting a peak of 597.25p last May as Bolland unveiled M&S’s first annual profit rise in four years. But shares have dropped gradually following those figures, recovering to 444.6p this morning after news of Bolland’s departure emerged.
Bolland’s ambitious aim was to transform M&S into an international, multichannel retailer. But while improvements to the website meant he succeeded with the latter, M&S has not enjoyed much success overseas.
‘While improvements to the website meant Bolland succeeded with multichannel, M&S has not enjoyed much success overseas’
M&S’s international sales reached £1.08bn in the year to March 30, 2013, but underlying operating profit fell 9.9% to £120m.
By April 2014, M&S revealed it was eyeing 250 new stores in India, China, Russia, the Middle East and Western Europe, and in March 2015, it targeted Guangzhou and Beijing to continue its Chinese expansion, opening a flagship store in latter city last month.
But sales failed to live up to Bolland’s expectations. M&S’s interim filing in November revealed that international sales dropped to £506.6m, as operating profits slumped to just £24.7m.
Although this is Bolland’s only major failure in the UK, it is one of huge significance that, for many observers, will define his reign.
Like-for-like general merchandise sales have been in positive territory for just four quarters since the start of the 2011 financial year. The last of those positive periods – a 0.7% uplift reported last April – came as M&S unveiled its first rise in profits for four years. But rather than spark a turnaround, it merely papered over the cracks.
While items such as its brown suede skirt helped improve the image of M&S’s offer, its fashion proposition has failed to capture consumers
While items such as its brown suede skirt helped improve the image of its offer, its fashion proposition has consistently failed to capture consumers, despite Bolland’s best efforts.
He put together a new clothing team in 2012 – which included former Debenhams boss Belinda Earl as head of womenswear – and brought design back in-house, but those changes have not delivered the sustained sales growth Bolland desperately needed.
And the long-awaited overhaul of its website added to his fashion woes, sparking an initial plunge in ecommerce sales as fashion rivals such as Next capitalised on M&S’s dallying and enjoyed online success.
Lacklustre general merchandise sales have been a blot on the M&S copybook for too long – and it’s one that Rowe will be under pressure to erase.