UPDATE 2-New M&S boss Rowe keeps control of clothing division

* Steve Rowe started as CEO on April 2

* Says won’t appoint executive director general merchandise

* M&S to publish Q4 trading update on April 7

* General merchandise like-for-like sales seen down 3.4 pct

* Food like-for-like sales seen up 0.3 pct (Adds detail, analysts’ forecasts for Q4 sales)

By James Davey

LONDON, April 4 (Reuters) - Steve Rowe, new chief executive of British retailer Marks & Spencer, will continue to lead its clothing business, making a turnaround of the troubled division his top priority.

Rowe, an M&S veteran of 26 years, succeeded Marc Bolland as CEO of the clothing and food stores group on Saturday, stepping-up from his role leading general merchandise which he has held since only last July. The general merchandise division consists of clothing, footwear and homeware.

Although it contributes about 60 percent of M&S’s profit the division has enjoyed just one quarter of like-for-like sales growth in 20 quarters. It is expected to report another fall when M&S updates on latest trading on Thursday.

“I’m going to carry on looking after general merchandise,” Rowe told Reuters on Monday, adding he had no plans to appoint a new executive director for the division.

“The (GM) business unit directors will continue to report to me for the foreseeable future because that’s where I believe the priority is...We need to get GM working.”

Rowe’s biggest challenge is arresting the decline in womenswear sales. Womenswear has been described by a former M&S executive as “the golden key to the golden door” because of its halo effect on other parts of the clothing and home business.

Dutchman Bolland, chief executive from 2010, spent billions of pounds on redesigning products, stores, supply chain logistics and the website to address decades of underinvestment. However, he failed to deliver a sustained rise in clothing sales to accompany the profit margin gains he did achieve.

Shares in M&S have fallen by over a quarter over the last year and late last month hit an 18-month low after rival Next warned this year could be the toughest since 2008.

Rowe, 48, said he spent his first morning as CEO meeting staff and customers at the company’s Croydon store in south London -- the shop where he worked as a Saturday boy at age 15.

He had spent Monday briefing staff at M&S’s central London headquarters.


For the 13 weeks to March 26, its fourth quarter, the firm is forecast by analysts to report a fall in sales of general merchandise at shops open more than a year in a range of 2-5 percent, with a consensus of a 3.4 percent decline.

That compares with a third quarter fall of 5.8 percent.

M&S’s food business is performing much better than clothing, with analysts on average forecasting fourth quarter like-for-like sales up 0.3 percent, a 26th straight quarter of growth as it benefits from new products and a focus on providing treats for special occasions.

Rowe said he will not be talking about his plans for the retailer on Thursday but will outline some of his strategic thinking when M&S reports full-year results on May 25.

In a clue to future direction, Rowe last year promoted Queralt Ferrer, an executive known for a more fashion-focused approach, to have overall design responsibility for womenswear. And since January Rowe has cut starting prices for basic clothing products.

“Our view is that within GM, margin should be invested to improve product quality and value for money, as it was in the food division a while back,” said analysts at Peel Hunt.

They expect Rowe to downgrade profit expectations for 2016-18 in May, with the promise of growth thereafter.

Other analysts say Rowe may further streamline M&S’s board structure to hasten decision making and take steps to reduce the firm’s bloated estate of nearly 900 UK stores. (Editing by Keith Weir)