Marks & Spencer has struggled to stem the declines in its clothing division

Marks & Spencer has struggled to stem the declines in its clothing division

It's no secret that Marks & Spencer has struggled to stem the losses in its clothing division. And with the unit's head Steve Rowe departing to take on the role of group CEO, the gap will need to be filled relatively quickly if the UK retailer is to address this problem area.

The news last week that Marc Bolland is stepping down as chief executive was delivered with a trading update that revealed the group's most disappointing clothing sales for the Christmas period yet.

Revenues were down 5%, with like-for-like sales falling 5.8%, blamed predictably on challenging trading conditions and unseasonal weather.

The division has been led by Rowe since July last year, who moved across from his position as executive director of food when John Dixon stepped down. But with Rowe set to step into the top role on 2 April, the race will now be on to find a suitable candidate to replace him. 

So far, M&S has said nothing about who will take up the position of director of general merchandise, so whether the company looks internally or externally is currently anybody's guess. 

Anusha Couttigane, senior consultant at Conlumino, says that given the size of Marks & Spencer, it can't afford to have long-term vacancies in such high-level roles. 

"Over the last year, the retailer has had a high turnover of staff at executive level. We mustn't forget that Steve Rowe was effectively doubling up when he took over from John Dixon and that Laura Wade-Gery, the next in line to the throne, has extended her maternity leave. This means that there are some significant gaps at M&S."

Internal management cycle

In one clue to the future direction M&S might take, Rowe promoted Queralt Ferrer to overall design responsibility for women's wear in September last year. He is an executive known for a more fashion-forward approach and is a former executive of Inditex, owner of the Zara fashion brand.

The appointment was part of a management reshuffle by Rowe last year, which saw Jo Jenkins named as head of women's wear, lingerie and beauty, following the sudden departure of Frances Russell.

But as Couttigane points out, Russell was one of three important figures on the clothing side to leave within quick succession, including Kate Bostock and Dixon.

"M&S has so far relied on internal promotion to cover sudden vacancies and, as a result, most of its senior leaders are already deputising or job sharing; Helen Weir is covering for Laura Wade-Gery but her absence has no doubt left Sacha Berendji quite stretched too, given that Weir continues to maintain full responsibility for finance. 

She adds: "What we are seeing is a pattern where important people leave and their roles are either filled by someone beneath them or split between other division heads. This clearly isn't a sustainable solution, because it either over-stretches people who already have considerable responsibility and are no doubt busy themselves, or relies on appointing junior employees who, seemingly, have little choice but to step up – but this still leaves a gap somewhere."

Recruiting internally, therefore, might not be the answer, and reports this week that M&S had approached EasyJet CEO Carolyn McCall for the group chief executive role suggests the retailer might be willing to look externally for its man, or woman.

Couttigane believes there is a strong argument for internal progression: "Promoting internally can be a benefit to a retailer of Marks & Spencer's scale, as a number of its key players are M&S lifers who understand the business, understand the challenges, and know what has already been done to try and remedy it."

However, as she points out, any internal appointment will still leave gaps at a relatively senior level, meaning M&S will still need to recruit externally to plug those gaps. 

"It has two choices: search externally to ensure the biggest needs are met (GM/clothing and food directors) or promote internally to those positions and look externally to plug the sub-executive gaps. Either way, the business is going to need to look outside because it can't just expect to simply promote from the bottom up until the pyramid is topped. It needs experienced leaders at the head of each core division, and introducing some fresh blood might not be a bad idea."   

Stemming a tide of losses

Whoever does take up the role will have his/her hands full trying to pull M&S's fashion division into the same orbit as food.

Dixon was once reported to have described women's wear as "the golden key to the golden door" because of the glow it gives M&S when successful. Unfortunately, over the last 16 quarters general merchandise has experienced 15 quarters of decline, and some of those relatively large. 

Clothing, however, remains crucial to the retailer because it is much more profitable, so any new blood will need to come armed with a potentially radical strategy if it is to compete more effectively with the plethora of fast fashion and affordable luxury players now in the market like Zara, H&M and John Lewis. 

But what is the elusive formula that will lure shoppers back to its clothes? In its heyday, Marks & Spencer was the go-to retailer for children's school clothing, work suits, lingerie and basics. It was renowned for its quality, knitwear and tailoring. Billions of pounds spent on redesign, stores, supply chain and online has failed to deliver sales results, as shoppers look elsewhere for value.

There have been highlights, however, such as the launch of the suede skirt worn by fashion celebrity Alexa Chung last year. It contributed to the first profit rise for four years. And there have been the launches of sub-brands Per Una and Autograph, aimed at the more fashion-focused consumer. But these have been criticised in the past for being too similar, and for the clothing division as a whole trying to be all things to all people.

The building blocks, however, are now in place. And Rowe, an M&S lifer having joined the group aged 20, has already worked wonders for food, delivering 25 consecutive quarters of like-for-like sales growth. Maybe he will bring to the CEO role a winning strategy for clothing, different to that of Bolland – whether that involves more defined ranges, the acquisition of third-party clothing brands, or a more promotional strategy.