Tough first six months at M&S for Steve Rowe

A 20% slide in the shares during Steve Rowe’s first six months in office is the worst start to a tenure in office of any of M&S’s last six bosses, in share price terms.
8 November 2016

 

 

First 6 months

First 12 months

Term of office

Steve Rowe

02-Apr-16

-21.2%

 

 

Marc Bolland

01-May-10

16.5%

5.9%

11.1%

Stuart Rose

01-Jun-04

-8.3%

-8.6%

0.3%

Roger Holmes

01-Sep-02

-10.4%

-10.2%

5.4%

Luc Vandevelde

01-Feb-00

-12.4%

-11.7%

34.7%

Peter Salsbury

01-Feb-99

5.5%

-24.3%

-24.3%

AVERAGE

 

-5.1%

-9.8%

5.5%

Source: Thomson Reuters Datastream

Russ Mould, investment director at AJ Bell, comments:

“Investors clearly want to see more than gimmicks like buybacks and special dividends if they are to show interest in a stock which is trading at May 1992 levels.

“Operational performance still is not good enough. The rate of decline in like-for-like sales at Clothing & Home improved but a 2.9% year-on-year drop was still the sixth in a row and the eighteenth in the past twenty-two quarters.. A 0.9% drop in Food and meagre 0.4% increase at M&s.com show there is much to do.

“However, Rowe is clearly aware of this and has outlined a vigorous restructuring plan:

  •  “The International business will be run on a franchise basis, which lowers cost and risk, in a bid to eliminate £45 million in annual losses. This shift, which brings M&S into line with chains that trade well overseas, like TopShop, reduces staff costs, brings in local managers who know their markets better, helps volumes and reduces markdown.

  • “On the domestic front a quarter of Clothing & Home space will be repositioned, presumably toward food, albeit at a three-year cost of £150 million over three years. M&S is also cutting both capital investment and marketing expense.

“Cost-cutting will help to support earnings forecasts but this will only take M&S so far.  To truly revive profits the company must get Clothing & Home right and it is currently hard to argue that M&S has really found its fashion handwriting.”

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