Nov 18, 2009
M&S says new boss to be Morrison's Marc Bolland
Nov 18, 2009
LONDON, Nov 18 (Reuters) - British clothing and food retailer Marks & Spencer (MKS.L) named Marc Bolland as its next leader, passing over internal candidates to poach the marketing expert who led a turnaround at Wm Morrison Supermarkets (MRW.L).
M&S shares rose 5.9 percent to a 17-month closing high of 390 pence, as analysts said Bolland's experience in groceries and business systems could speed a recovery in its upmarket food operations as well as drive a cost-saving supply chain upgrade.
The appointment, several months sooner than expected, also brings towards a close a 20-month row with investors over Stuart Rose's move to be both chairman and chief executive of M&S, in defiance of British corporate governance guidelines.
"A superb, credible choice," said Cavendish Asset Management fund manager Paul Mumford.
Some analysts, however, questioned whether Bolland had the expertise to help M&S's clothing business fend off the challenge from discount, fast-fashion chains like Primark (ABF.L).
"Turning around M&S is likely to be harder for Bolland than Morrisons was," Execution analyst Caroline Gulliver said.
Bolland, a 50-year-old Dutchman who has spent most of his career at brewer Heineken (HEIO.AS), is credited with reviving Morrison, Britain's fourth-biggest supermarket chain, after its bodged acquisition of Safeway in 2004.
Ignoring some analysts' call for a radical overhaul, he stuck with the group's traditional "Market Street" format of fresh food counters but gave it a makeover backed by innovative promotions, new product ranges, and tight cost management.
Shares in Morrison, which has been the fastest growing of Britain's top four food retailers for most of the past two years, fell as much as 5.8 percent to 278.5 pence.
"Has the Morrison story 'got as good as it gets' for Mr Bolland?" said Shore Capital analyst Darren Shirley, cutting his rating on Morrison shares to 'hold' from 'buy".
"We sense Morrison will miss him materially."
Morrison said Bolland would leave at the end of January and M&S's Rose told BBC radio he probably wouldn't start until late spring, although the date and terms were yet to be confirmed.
Analysts said he would be richly rewarded, as he was walking away from Morrison with 4 million pounds ($6.7 million) of shares unvested.
"Being CEO of M&S is the job in UK retail," said one of the top 10 investors in Morrison. "It's a bit like being asked to be England football manager isn't it? You don't turn it down."
M&S has had a torrid recession. Its shares plunged around 60 percent last year as customers switched to cheaper rivals and two internal candidates for CEO left the business.
But it has bounced back, helped by cutting prices, new clothing ranges like Indigo, and innovative food promotions like "Dine in for two" for 10 pounds.
SG analyst Anne Critchlow said Bolland was well placed to continue the good work, and might be able to speed up the 250 million pounds of benefits M&S hopes to achieve by 2015-2016 from upgrading business systems.
Investec's Katharine Wynne said his background in international brand marketing at Heineken would also strengthen the group's hand with its plans to expand more overseas.
M&S had said it would prefer an internal candidate, with finance director Ian Dyson, food chief John Dixon and clothing boss Kate Bostock seen as contenders. Analysts said they failed to impress at an investor day in October.
"We've always said ... we wanted to get the very best candidate," said Rose, who will become part-time non-executive chairman when Bolland joins.
"I'm sure if you were to ask my senior management team whether they thought Marc was a good catch, they'd all say yes," he said, adding there was no reason why any would leave.
Rose said there would be a handover period of around six weeks after Bolland joined and he would not interfere before stepping down as chairman by July 2011, as planned.
Bolland has experience taking over businesses from high-profile leaders, having taken the helm at Morrison from a founding family member and major shareholder, Ken Morrison.
Bolland will be M&S's second non-British boss, following Belgian Luc Vandevelde whose troubled tenure in the top job culminated in a second failed bid attempt for the retailer from billionaire Philip Green in 2004 and Rose's appointment as CEO.
Morrison, due to issue a third-quarter trading update on Thursday 19 November, said it would consider internal and external candidates to succeed Bolland. Analysts said finance director Richard Pennycook would be a strong contender.
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(Additional reporting by Raji Menon and Matthew Scuffham, Editing by Dan Lalor and Elaine Hardcastle) ($1 = 0.5946 pound)
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