Terry Murden: M&S hopes for Morrisons magic from its new chief

Published on Wednesday 18 November 2009 20:17

AFTER sorting out the mess of Morrisons' merger with Safeway, the new Marks & Spencer chief executive, Marc Bolland, has taken on perhaps a bigger task: satisfying the bra and pants lobby that turns up at every M&S AGM to tell the directors exactly what they think of the firm's underwear.

Getting women's fashion right will be the benchmark test for Bolland, who was not the company's first choice, but has a right to be regarded as a good one.

His performance at Morrisons has been impressive. Since taking over as chief executive of the supermarket chain from patriarch Ken Morrison three years ago, the Dutchman has lifted profits from 369 million to 655m and turned a dour northern business, renowned for its pies, into a big-four growth story.

Now he just has to perform the same sort of sales and profits trick at M&S. All he needs is the same sort of transforming strategy he has undertaken from his Bradford base.

Look at the record: a new mini-Morrisons store format that is helping attract younger, better-off customers in different parts of the country; they will add 225m to Morrisons' overall sales in their first year.

While this is a relatively small contribution, Bolland says they will give Morrisons flexibility as it seeks to reach more shoppers beyond its traditional north of England heartland.

But probably his biggest achievement has been to convert a sceptical and snobbish southern shopper who initially resented this northern intruder.

Expansion of Morrisons into southern England helped the company overtake Tesco, Asda and Sainsbury's as Britain's fastest-growing supermarket chain. As it has passed the big three, so it has been winning market share from – ironically – Marks & Spencer.

His appointment at M&S ends a 20-month search for a successor to Sir Stuart Rose, a process that has seen a number of industry stalwarts, such as Andy Bond at Asda and Justin King at Sainsbury's, turn down the offer.

The challenges facing Bolland are immense: the food division is by far the weakest half of the business, but this is surely the task that Bolland will most relish. At Morrisons he had to raise the quality threshold. To some extent, he'll have a reverse problem at M&S where he has to battle against cheaper alternatives. He'll need to see off a resurgent Waitrose and, presumably, was party to the decision to introduce branded products for the first time.

His other big task will be sorting out fashion, and his lack of experience in this sector has been seen as an Achilles' heel. But he'll surround himself with the best people to restore the company to what it sees as its rightful place in the market.

Investors certainly like what they see, marking M&S shares up nearly 6 per cent to push M&S to the top of the FTSE 100 leader board. They responded to his departure from Morrisons by knocking 5 per cent off its shares as worries emerged as to its ability to find a suitable successor.

Bolland must hope he can achieve the same level of popularity among the ladies who rely on M&S for their bras and knickers.

Howie / BSW Timber

THE sale of Howie Forest Products to BSW Timber has given some sense of security to the vendor's 150 staff and shown there is life in the M&A market.

It looks like a good deal for both companies, providing a platform for Howie to grow and a nice little earner for BSW, which picks up a firm making 5m profit on 30m of turnover.

The sector is not among the most talked about, yet it has a significant presence in the Scottish economy.

The merger of two of its biggest players creates a chunky business that will probably seek other acquisitions and which is now looking to take advantage of overseas markets for the first time due to the weakness of the pound.

A 600-employee company turning over 100m will result from this deal.

While this restores BSW to its pre-recession scale, it bodes well for the future at a time when Scotland needs to create more companies with growth ambitions.

According to Andy Baker at Baker Tilly, there are signs that banks are becoming increasingly active in the M&A arena and that will also come as a relief to the advisory community, which has been starved of deals.