Archie Norman Accepts M&S Call as Retailer Seeks TurnaroundBy
Norman revamped U.K. supermarket chain Asda in the 1990s
Shares gain as much as 5.9% to highest since June last year
A quarter century after masterminding one U.K. retailing turnaround, Archie Norman is being asked to oversee another.
The 63-year-old former lawmaker was on Friday named chairman of Marks & Spencer Group Plc, tasking him with guiding the revival of a once great British institution that’s been gradually losing relevance in the digital era.
The challenge facing Norman is very different to the one he took on at the Asda supermarket chain in the early 1990s, a career-defining period in which he took the chain from near bankruptcy to a 6.7 billion-pound ($8.7 billion) sale to Wal-Mart Stores Inc. Since then, the rise of e-commerce has changed the retail market beyond recall and left M&S a shadow of its former self as it failed to grasp the online nettle.
“Appointing Archie is a fantastic call, he’s a great leader,” said James Hyde, director of U.K. executive search firm Flint Hyde. “He steered Asda away from a really bad place.”
Norman will be paid 600,000 pounds a year by M&S, about a third more than his predecessor Robert Swannell.
Marks & Spencer shares rose as much as 5.9 percent to 378.6 pence after the announcement to the highest since June last year. The price is almost the same as it was in 1999 when Norman agreed to sell Asda to Wal-Mart, illustrating the extent of the retailer’s ensuing difficulties. M&S has struggled to cope with a welter of online and discount competition that’s caused clothing sales to fall to levels last seen a decade ago.
While much has changed in the retailing world since Norman’s Asda days, he will recognize the measures being implemented by Marks & Spencer’s current Chief Executive Officer Steve Rowe as he seeks to halt the slump.
Since taking the helm last year, Rowe has announced the closure of all M&S stores in 10 international territories, as well as 30 outlets domestically, cut head office and management roles and lowered prices. The strategy bears similarities to Norman’s first year at Asda, when he took higher-priced branded goods off the shelves, reduced management and closed stores.
“Mr. Norman is a formidable appointment who, alongside Steve Rowe, means that there are two very strong characters at the helm of a once-great British label that is trying to refind its purpose and relevance to the British shopper,” Clive Black, an analyst at Shore Capital, said in a note.
The duo will be joined by Jill McDonald, who this week resigned as CEO of auto-parts seller Halfords Group Plc and will take over as head of M&S’s clothing business later this year.
The challenges facing Norman and his executives are clear cut, though some are outside their control. Costs for all fashion retailers are soaring as the pound’s Brexit-induced slump adds to purchasing expenses and a new U.K. minimum wage drives up labor costs. Furthermore, Brits are allocating less disposable income to clothing in favor of leisure.
The vast experience of Norman, who has served as a Conservative member of parliament and was until recently chairman of broadcaster ITV Plc, may raise questions over how comfortable he will be in a non-executive capacity.
“Some people thought that Archie was too heavyweight for the role,” said Nick Bubb, an independent retail analyst. “It remains to be seen how much of a back-seat driver he is.”