M&S chief 'may try to raise £750m' to turn around chain

Published on Wednesday 31 March 2010 21:14

INCOMING Marks & Spencer chief executive Marc Bolland could stage a rights issue as early as this autumn to fund his turnaround of the chain, analysts said yesterday.

City experts believe Bolland may seek to raise 750 million from shareholders to address the under-performance of M&S's up-market food business, reinvigorate its clothing ranges and overhaul distribution and IT systems.

Analysts said Bolland faces a challenge against a backdrop of weak consumer spending and pointed out that he will not have the balance sheet strength that helped him to drive a turnaround at his previous employer, supermarket chain Morrisons.

Greg Lawless, an analyst at Collins Stewart, suggested Bolland will unveil his plans around the time of the company's interim results in November.

"Marc Bolland has one opportunity to tap the market as he outlines his strategy," Lawless added.

Paul Mumford, senior fund manager at Cavendish Asset Management, said: "I would hope that Bolland hits the floor running. People will be looking for like-for-like sales improvement plus margin improvements. If that doesn't happen, it does put the company in the spotlight for corporate activity."

A potential takeover bid could come from the likes of retail billionaire Philip Green, who has already twice attempted to add M&S to his clothing and department stores empire, analysts said.

Many in the City believe that M&S does not have the scale to compete with mass market grocers and say it needs to decide whether to offer a broader range of products like Waitrose, or focus on a smaller set of high-quality goods.

JP Morgan-Cazenove's Steve Oldfield prefers the latter but warned it may "stretch the already different pitch of the food and general merchandise business".