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Comment: Bookies gamble on Bolland to lose M&S crown

Terry Murden. Picture: TSPL

Terry Murden. Picture: TSPL

  • by TERRY MURDEN
 

FANCY a bet on Marc Bolland’s chances of survival at Marks & Spencer? The bookmaker Paddy Power will give you just 9/2 that the beleaguered chief executive will be gone by the summer and even skinnier odds of 4/9 that he remains until this time next year.

At 9/4 he is tipped to be the first supermarket boss to quit this year, ahead of the struggling Dalton Philips (5/2), who has overseen supermarket chain Morrisons’ dismal performance.

City reaction was not particularly encouraging either after M&S missed sales expectations and profits were only salvaged by cost cutting. Worrying for Bolland is that, despite considerable investment in new stores, the business continues to suffer erosion as competitors such as Debenhams, John Lewis and Primark take market share. It was the sixth consecutive quarter of decline in general merchandise and there is concern among investors that the chain faces considerable challenges. No wonder the shares took a hit.

Caroline Gulliver at Espirito Santo investment bank notes that M&S has disappointed investors many times and for varied reasons (rain, Olympic distraction, buying mistakes, competitor promotions, and so on) but the conclusion, she comes to is that customers are just not happy with M&S’s product and value. It gets to the heart of Bolland’s dilemma, that however much he invests in store layouts and presentation, he needs to ensure M&S is appealing to its core constituency.

It puts pressure on the new management team that Bolland has built around him to avoid a repeat performance next Christmas. He will be hoping he is still around to witness the improvement.

Clarke gets a little help as Tesco enjoys revival

CONTRAST Bolland’s problems at M&S with the mini-turnaround by Philip Clarke at Tesco, which reported a decent, if not startling, Christmas and indicated that the key UK business is back on track. Clarke will be relieved that he managed to head off a robust challenge from Sainsbury’s, even if there was a touch of animosity between the two yesterday over how Tesco produces its figures.

Clarke was another of the big retail bosses on the investor rack over weaker trading figures and has already had to take a tough approach to the chain’s flagging US business Fresh & Easy which suffered another fall in like-for-like sales.

Tesco operates in more than a dozen countries, but there are big questions to be answered over its overseas strategy and whether it generates sufficient shareholder value.

But the UK is a priority and Clarke has brought in long-time colleague and Tesco veteran Chris Bush to run the core business which gives investors some confidence. Among a number of changes, the key hire could be Robin Terrell as multi-channel 
director who has similar experience at House of Fraser and John Lewis and was in charge of Amazon’s UK business.

Like other retailers, Tesco is relying increasingly on its online operations to drive sales and some analysts believe the Tesco Direct service in particular sets it apart from the competition.

The online grocery business delivered sales growth of 18 per cent, ahead of the 15 per cent achieved in the previous quarter. Over half a million food orders were fulfilled in the week before Christmas, with nearly 5 per cent of these being picked up by customers using the drive-through “click & collect” service, which is now available at more than 140 stores.

 

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