17th Jul 2015 09:12
LONDON (Alliance News) - Marks & Spencer Group PLC dropped to the bottom of the FTSE 100 in early trade on Friday after it said John Dixon, its General Merchandise division executive director, has left the company to pursue other career opportunities and it has appointed the head of its Food division to replace him.
Dixon will leave the FTSE 100-listed retailer's board with immediate effect and will leave the company on a date to be agreed. Dixon said he is leaving to become the chief executive of another company, though he did not name the company.
Steve Rowe will take on responsibility for the General Merchandise business. Rowe is currently the executive director of Food at the company and will be replaced, on an interim basis, by Andy Adcock, who is currently the trading director of the Food division.
Rowe has been with the company for 26 years, having started his career in store management, and has experience in M&S's food, retail, General Merchandise and e-commerce businesses.
"On behalf of the team and all our colleagues at M&S, I would like to thank John for his contribution to the business. I am delighted to appoint Steve to the role of executive director, General Merchandise. Steve has outstanding experience working across the business and is well placed to take the General Merchandise business forward. I look forward to continuing to work closely with him," said Marc Bolland, M&S's chief executive.
M&S shares were down 1.2% to 539.50 pence on Friday morning, the worst performer in the FTSE 100.
Dixon's departure comes as M&S continues its drive to improve the fortunes of its General Merchandise business, which primarily sells clothing and homeware products, following nearly a decade of struggles and sluggish sales. In its first quarter trading update earlier this month, the company posted a fall in like-for-like sales in General Merchandise of 0.4%, a disappointing result for the company given the like-for-like growth seen in the fourth quarter of its 2015 financial year.
For its 2015 financial year, covering the 52 weeks to March 28, M&S's General Merchandise business failed to meet expectations, with sales down by 2.5% in total and declining 3.1% on a like-for-like basis. But the division did demonstrate positive like-for-like growth in the final quarter, and its gross margin for the year improved by 190 basis points, benefiting from sourcing gains and slightly lower discounting.
M&S said in its first quarter trading update that it continued to focus on improving product quality and style in a challenging quarter hit by promotions and that it is on track to deliver its full-year guidance of 150 to 200 basis points gross margin improvement in that area of the business.
Chief Executive Marc Bolland told journalists after the trading update that in the first month of the quarter, the General Merchandise business was continuing with the same positive trends as in the prior quarter, but was hit in May and June by increased promotional activity.
But the Food business, from where Rowe will move, has been the consistent star performer for M&S. In the first quarter, total Food sales for M&S were up 3.2% on the back of 0.3% like-for-like growth. That came after the division posted a 3.4% sales rise, and 0.6% like-for-like growth, for the 2015 financial year. Including the first quarter the current financial year, the Food business has now delivered 22 consecutive quarters of like-for-like growth.
In the first quarter quarter, the Food business continued to outperform the wider UK grocery market, despite the challenging conditions which are forcing UK supermarkets to cut prices in the face of growing competition from discounters Aldi and Lidl. M&S launched 700 new lines in the quarter, and the company said it is on track to open around 90 new Simply Food stores this year.
"John Dixon's departure comes as M&S's general merchandise division, especially womenswear, have defied repeated efforts by management to improve sales over several year," said Helal Miah, an investment research analyst at The Share Centre.
"If his successor, Steve Rowe, can finally reach the potential of increase profitability in general merchandise, this could be positive news for investors. He has been with M&S for over 26 years and therefore brings significant internal knowledge to the role," Miah added.
By Sam Unsted; [email protected]; @SamUAtAlliance
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
Marks & Spencer