M&S Clothing Chief Bostock to Step Down After Sales Slump
Marks & Spencer Group Plc, (MKS) the U.K.’s largest clothing retailer, said general-merchandise chief Kate Bostock will step down as part of a management shake-up following the biggest decline in non-food revenue since 2008.
Bostock will leave on Oct. 1 after more than eight years at the company, and be succeeded by John Dixon, head of the food unit. Belinda Earl, a former chief executive officer of competitor Debenhams (DEB) Plc, will join as style director, the London-based retailer also said today in a statement.
Bostock departs amid a slump in sales of clothing as Marks & Spencer loses ground to competitors such as Debenhams and John Lewis Partnership Plc in women’s fashion. Same-store sales of general merchandise, which is mostly apparel, fell 6.8 percent in the first quarter ended June 30, the company said today. The worsening performance ratchets up the pressure on Chief Executive Officer Marc Bolland, who joined in May 2010 with a mandate to revive sales after two years of declining growth.
“It’s disappointing that Kate Bostock has not actually produced the improvement investors were looking for,” said Paul Mumford, a fund manager at Cavendish Asset Management, who holds M&S stock. “We need a bit of management stability.”
Bostock, 55, is leaving “by mutual consent” as part of a planned transition, Bolland said on a conference call.
While Bostock’s departure had been predicted in the media, the appointment of Earl is a surprise. Earl, 50, started her career at Harrods and worked for almost two decades at Debenhams, the last three years as CEO. Most recently, she was CEO of Jaeger Group Ltd. She joins Marks & Spencer on Sept. 1.
“She probably understands the challenges of serving the U.K. woman better than most,” Caroline Gulliver, an analyst at Espirito Santo in London, said in a note today.
Among other management changes announced by Marks & Spencer today, Steve Rowe, who is currently director of retail, will succeed Dixon as head of the food unit. Patrick Bousquet- Chavanne, a former group president of Estee Lauder Cos., will join the company on Sept. 1 in the new role of corporate director of strategy implementation.
“These changes should help to restore some stability at a critical time for M&S, but may take time to bed in,” Matthew McEachran, an analyst at Singer Capital Markets, said in a note.
Marks & Spencer rose 2.9 percent to 330.4 pence at 2 p.m. in London trading. The shares have fallen 9.8 percent since Bolland joined as CEO from William Morrison Supermarkets Plc.
About 4.63 percent of shareholders who voted at today’s annual general meeting in London opposed re-electing Bolland as a director. That was more than the 3.74 percent who voted against the retailer’s remuneration report.
“Marc Bolland is fighting for his own job,” Nick Bubb, an independent retail analyst, said by e-mail.
U.K. same-store sales fell 2.8 percent in the first quarter, the company said today, compared with the median analyst estimate for a 2.5 percent drop.
Britain’s double-dip recession and record April rainfall hurt business at most fashion retailers in the period. The short-term business outlook remains “challenging,” Marks & Spencer said, though it maintained forecasts for the year.
General merchandise underperformed the market in the quarter, with women’s wear losing share in the value category, Marks & Spencer said. At 10.4 percent, the company’s slice of the 39-billion pound ($61 billion) women’s clothing market is almost a full percentage point lower than it was five years ago.
A failure to buy enough stock caused a shortage of some popular lines such as casual summer sweaters, which it could have sold 60,000 more of in the quarter, Chief Financial OfficerAlan Stewart said on the call.
Same-store sales of food, which accounts for almost half of revenue, rose 0.6 percent in the three-month period, less than the 1 percent median analyst estimate.
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