March 8, 2018 / 2:38 PM / 8 months ago

M&S boss Rowe, new chairman Norman see eye to eye on strategy

LONDON (Reuters) - The chief executive of British retailer Marks & Spencer (MKS.L), Steve Rowe, said he and his new chairman, Archie Norman, differed very little on the strategic direction of the company and were working well together.

FILE PHOTO: Steve Rowe, CEO of Marks and Spencer, poses for a photograph at the company head office in London, Britain, November 30, 2016. REUTERS/Toby Melville/File Photo

Given Norman’s impressive track record of turning around struggling retailers, most famously the revival of supermarket chain Asda (WMT.N) in the 1990s, some analysts had feared he could go beyond his non-executive brief of running the M&S board and become a “back seat driver” of the business.

However, Rowe said on Thursday the dynamic between the two was “absolutely brilliant, we’re having a ball.”

“When you’ve got a period of uncertainty in retail like we do today, I genuinely believe that it’s good to have another retailer to bounce things off of,” he told the Retail Week Live conference.

“I think the combination is that one and one equals three,” he said.

Norman succeeded investment banker Robert Swannell as M&S chairman in September last year.

Two months later M&S re-set its strategy, saying it would speed up store closures and relocations as more trade shifts to the internet and would re-position its food offer.

Norman said M&S had been “drifting, unfulfilling its customer promise” for over 15 years, failing to deliver the pace of change required.

Rowe, who became CEO in 2016, is a 28-year M&S lifer.

Shoppers walk past a branch of Marks and Spencer in central London, Britain, November 3, 2017. Picture taken November 3, 2017. REUTERS/Toby Melville

“We agree on 85 percent of everything we talk about, that’s brilliant,” said Rowe.

“There’s 10 percent we don’t agree on and we debate it and we get to a solution. And there’s 5 percent of stuff we will never agree on. That’s really healthy.”

Both have said investors will need to be patient. M&S is forecast to report in May a second straight fall in annual profit.

FRAGILE CONSUMER

On the sidelines of the conference Rowe told Reuters the British consumer was “fragile” and “volatile”.

Britons are spending more on food but cutting back on non-essential purchases as their spending power is squeezed by inflation and subdued wage growth.

More UK retailers are struggling. Last week Toys R Us UK and electricals retailer Maplin collapsed into administration, putting over 5,000 jobs at risk, while Carpetright (CPRC.L) and Mothercare (MTC.L) both warned on profit again and said they were talking to lenders.

On Wednesday fashion retailer New Look said it planned to close 60 of its 593 UK stores, threatening 980 jobs, while on Thursday the John Lewis Partnership [JLPL.UL] reported a 22 percent drop in annual profit.

Rowe also told the conference he was “very pleased” with initial results from a small online grocery delivery trial launched last year.

“Would our customers like it? Yes they do,” he said.

But he said some questions remained unanswered and required more work.

“Does it increase the basket (size of sales)? There’s some maths in here which is really important if you’re going to have a profitable online business. Are we willing to pay for the service? What’s the cannibalization (from stores)?”

Editing by Adrian Croft

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