Consumer

Andrea Felsted is a Bloomberg Gadfly columnist covering the consumer and retail industries. She previously worked at the Financial Times.

You're a struggling retailer needing a big turnaround, and you want a new chief executive. Who should you pick: a company lifer, or an international high-flyer?

U.K. stalwarts Debenhams and Marks & Spencer are exactly opposite on this one.

Debenhams said Thursday it will replace longtime-staffer Michael Sharp with Sergio Bucher, who for the past three years led the European fashion business at U.S. behemoth Amazon.

Marks & Spencer in January parted company international marketing guru Marc Bolland and took on Steve Rowe, who started out on the company's shop floor.

Investors have already voted on which type they prefer -- Debenhams is up more than 1 percent after the staffing change was announced. M&S, meanwhile was punished with a 10 percent drop in shares on Wednesday after Rowe set out a plan to turnaround the business that would take a near-term toll on profits.

Under Pressure
Sales at Debenhams and M&S's clothing arm have flatlined while rival Next has gained some ground
Source: Bloomberg

But a bit of global flash can be a distraction. 

Debenhams' intention to push the brand abroad and build its e-commerce platform should be eerily familiar. In fact, that was the mantra of Bolland when he took the helm of M&S in 2010.

Fast forward six years and now Rowe is reviewing the future of the international arm, which struggled to gain traction in a particularly unforgiving international environment. 

In many ways, Debenhams and M&S face similar problems, as far as clothing goes (M&S also has a big food business while Debenhams does not).

But what they both need is a sharp focus on the nitty-gritty of retailing, not international brand-building. And investors should remember that.

Both stores need to get their mojo back when it comes to fashion.

At M&S that is getting the balance right between classic and cutting-edge for its female customers who are more 50-something than millenial.   Rowe has explicitly decided to "cherish" the retailer's core customer, "Mrs. M&S," after she'd been sorely alienated with higher prices and excessively trendy fashions.

At Debenhams it means reinvigorating its Designers at Debenhams ranges, which have become too dated for its core 41-year-old female customer. Bucher's experience at Nike, Puma and Inditex will come in handy here.

They both need to wean themselves off of the drug of constant promotions -- trickier when the customer has got used to buying on sale.

And perhaps most significantly, they both need to tackle sprawling store estates. M&S has about 300 U.K. properties selling clothing and homewares. Debenhams has 161 British stores, after Sharp went on an investment binge when he took the top job in 2011.

They are both grappling with the rise of online shopping: here at least Bucher should have an advantage. Amazon is making inroads in fashion, and his experience will help Debenhams navigate a market where 20 percent of non-food sales are now made via the internet.  

Online sales, while crucial, are hard to get right. M&S's are slowing, despite years of investment under Bolland. Rowe has pledged to improve online shopping, but hasn't given much detail as yet.

The punishment the market has meted on M&S for its stick-to-the-knitting approach looks harsh. It reflects a perception that the short-term slump in profit might not necessarily be followed by a strong recovery. But it ignores the fact that much of what Rowe set out is long overdue.

Low Expectations
Shares in Debenhams trade at a discount to both M&S and Next

The share price rise at Debenhams shows that investors are at least giving Bucher, who beneath the glitz seems to have the basic retail sense needed, the benefit of the doubt. Debenhams is on a forward price/earnings ratio of 9.4 times, a discount to M&S -- even after its pummeling on Wednesday -- and Next, so expectations are pretty low anyway.

Investors in Debenhams will be hoping their department-store chain hasn't been distracted by a bit of international flash with its choice of chief executive.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Andrea Felsted in London at afelsted@bloomberg.net

To contact the editor responsible for this story:
Jennifer Ryan at jryan13@bloomberg.net