M&S fashion turnaround behind schedule says CEO
At an investor day in London on Tuesday, M&S management owned up to something the retail sector had probably assumed for some time – that its turnaround program for its troubled clothing and home operation is way behind schedule.
It confessed that it’s running around 18 months late with its recovery plans and still has plenty of work to do, including making big changes in overall company culture, which might not make an impact until 2022 or 2023.
But the news didn't seem to disappoint investors and it looks like they appreciated the candour from CEO Steve Rowe and his team as the company’s beleaguered share price rose slightly on Tuesday, although it dipped again in Wednesday trading.
The firm’s recent results announcements have highlighted some of its problems with its buyers still over-ordering in some areas and buying too little in others. This has meant that the company has been left with too much clearance stock at the end of the season but, perhaps more crucially, it has been unable to meet demand for particularly popular items, which is a big turn-off for customers.
Steve Rowe said the company buys “too many clothes that didn’t sell, while popular lines sold out.” He also said that “planning and stock visibility” have been big issues and have left some empty shelves in the company’s shops.
And the problem isn't only being seen in its much-discussed womenswear operation as menswear has lost market share with a 1.5 percentage percentage points dip in the last five years. Feedback from customers seems to be that the menswear offer isn't youthful enough and that there are too many suits – in a more casual era, both older and younger men want to dress ‘young’ and few of them are buying suits for everyday wear.
In its presentation, M&S had a ‘traffic light’ system for where it is at present and while making the business accountable and injecting magic back into its food ops were both on green, everything else was way behind. Digital was on amber, as was a future-focused store estate. Meanwhile restoring style, fit and value in clothing was on amber-red, as was a modernised supply chain.
But Rowe, who is the first in a succession of M&S CEOs who really seems to be getting to grips with the company’s issues, is determined not to rush the transformation program and wants to ensure that it's done right.
The program includes a deep dive into online selling and the company said that it's seeing promising early signs of improving digital performance. It also said it's looking at entering the ‘buy now, pay later’ arena with a payments partner, although it hasn't signed with anyone yet.
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