M&S sees gains from infrastructure, ecommerce upgrades

CASTLE DONINGTON, England Wed May 8, 2013 4:22pm EDT

Branding is seen on a branch of Marks and Spencer on Oxford Street, central London, April 11, 2013. REUTERS/Andrew Winning

Branding is seen on a branch of Marks and Spencer on Oxford Street, central London, April 11, 2013.

Credit: Reuters/Andrew Winning

CASTLE DONINGTON, England (Reuters) - Marks & Spencer (MKS.L), Britain's biggest clothing retailer, said on Wednesday it was on track with a plan to address two decades of under-investment in its infrastructure and create a fast, agile and flexible supply chain.

M&S is spending 1 billion pounds ($1.56 billion) over six years to 2015 on logistics, IT and systems, as it seeks to become an international multi-channel retailer - connecting with customers through stores, the Internet and mobile phones.

It reckons that investment will deliver annual benefits of 300 million pounds.

"The business that we've got ... has under invested in this infrastructure for upwards of 20 years," said Chief Finance Officer Alan Stewart.

He was speaking at an investor and media visit to the firm's new ecommerce distribution center in Castle Donington, central England.

The huge Castle Donington site, big enough to hold 3,507 London double decker buses, is M&S's second major dedicated ecommerce facility.

The site, combined with the launch of a new in-house web platform next year that will replace M&S's use of Amazon (AMZN.O), will enable the retailer to provide a "step change" in online services to customers, including improved product availability and later delivery cut-off times.

"Take it from me I'm not going to settle for less than market-leading because that's what our customers need," said Laura Wade-Gery, executive director of multichannel ecommerce.

M&S currently offers a standard home delivery service that typically takes four days and a premium next day service. It also offers free next-day delivery for pick-up in store if orders are made before midday.

M&S's plan also includes investment in better buying and management systems for clothing, home and gift products and a move to source more products direct from suppliers.

The 129-year-old firm's chief executive, Marc Bolland, CEO since May 2010, is under pressure from investors to revive the firm's clothing business, which has been losing market share to firms like Primark (ABF.L) and Debenhams (DEB.L).

Last month M&S reported a seventh straight quarterly fall in underlying general merchandise sales and has also been the subject of renewed takeover speculation.

New autumn/winter clothing ranges are widely seen as make or break for a new general merchandise team, assembled by Bolland and led by John Dixon, the former boss of food, and Belinda Earl, the former CEO of Debenhams and Jaeger.

Bolland has repeatedly said the new team will not make a major impact on sales until these ranges hit the shops in July.

But he will give an update on strategy and launch the ranges to analysts and business media on May 14, a day before M&S hopes to win over Britain's influential fashion press.

A week later Bolland will present M&S's 2012-13 results, with analysts on average forecasting a 7 percent fall in pretax profit to 658 million pounds ($1 billion), according to a poll carried on the firm's website, a second straight annual fall. ($1 = 0.6425 British pounds)

(Editing by Kenneth Barry)

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