Marks & Spencer CEO Stepping Down With Turnaround Incomplete

(Bloomberg) -- Marks & Spencer Group Plc said Steve Rowe is stepping down after six years of turnaround efforts that have yet to convince investors the U.K. retailer is back on track.

Rowe, 54, will step down on May 25, when Chief Operating Officer Stuart Machin will become CEO and Katie Bickerstaffe co-CEO, with a focus on areas such as online operations, the company said Thursday. 

Rowe joined the company at the age of 15 and worked his way to the top, holding several leadership roles before taking over as CEO in 2016. He has overseen a difficult time at M&S, closing more than 60 stores and adapting the company to the rise of online shopping, a trend that was hastened by Covid-19 lockdowns. 

During Rowe’s tenure, M&S shares have lost more than half their value, closing little changed on Thursday.

With Machin and Bickerstaffe, Chairman Archie Norman is promoting both of the managers seen as the top candidates to succeed Rowe. Norman and Rowe have together been orchestrating M&S’s latest attempt to rejuvenate the brand, a stalwart of Britain’s shopping streets.

Change of Direction?

Machin will take responsibility for day-to-day leadership of the business while Bickerstaffe will focus on online operations and data. Both will effectively report to Norman, a former lawmaker who joined the retailer in 2017 after leading a turnaround at supermarket chain Asda. 

The change of leadership may present another shift of direction for M&S right at a time when the company’s long-promised turnaround was beginning to bear some fruit. The company raised its earnings guidance twice last year and once in January, defying fears that the spread of Covid’s omicron variant had hurt demand.

The household brand, with stores in every major town in the U.K., has been trying to revamp its business for at least the past decade. Successive management teams have repeatedly failed to return the chain to a time when profit topped 1 billion pounds ($1.3 billion).

M&S referred to “continuity of strategy” with the new leadership, but not all analysts agree.

Under Rowe, the retailer started a joint venture with Ocado Group Plc and also focused on improving its long-suffering clothing business.  

With Machin at the helm, there is a potential for M&S to pivot more toward food retail and away from clothing, said Tony Shiret, an analyst at Panmure Gordon. This also raises the risk of the retailer shifting tack another time, he added.

New Strategies

“If Machin comes in and changes the strategy yet again, there will be lots of write-offs and it just extends the period until when you get any meaningful recovery,” Shiret said. “None of the new strategies that have been put in place in recent years has really worked.”

Machin joined the company in 2018 and leads M&S’s food business as well as operations, property, store development and technology. He previously worked at a number of U.K. retailers, including J Sainsbury Plc and Tesco Plc, as well as Australian chain Coles, where Norman is an adviser. 

Bickerstaffe is currently joint chief operating officer, and she will continue to be responsible for clothing and home, international and financial services. She previously headed Dixons Carphone Plc’s U.K. and Ireland business. She is the first woman to hold the title of co-CEO at M&S in its 138 year history.

Among the leadership changes, Eoin Tonge becomes chief strategy and finance officer. 

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