Financial News

  • 3 March 2014, 7:58

M&S Takes Next Turn In New Efficiency Drive

Marks & Spencer (M&S) is turning to the architects of rival Next's widely-envied supply chain in a bid to drive efficiencies that will save it tens of millions of pounds a year.

Sky News has learnt that Britain's biggest clothing retailer has appointed two brothers, Mark and Neal Lindsey, as sourcing directors for general merchandise, with specific responsibility for clothing and footwear.

The appointments will hand the Hong Kong-based duo powerful influence over much of M&S's commercial activity, according to insiders, overseeing its network of regional sourcing offices around the world as well as its large London-based central sourcing team.

Taking up their roles on Monday, they will be charged with boosting M&S's margins at a time when the City remains unconvinced about the long-term prospects of the company.

The Lindsey brothers have a long track record in the secretive milieu of global fashion sourcing, where billions of pounds changes hands as international retailers attempt to squeeze suppliers in order to boost profits.

Although little-known in the UK, they played an important role in assisting Next's rise to prominence on the high street and its establishment as a darling of the City.

The Lindseys oversaw the growth of Next Sourcing Limited, which streamlined Next's supply chain to improve its speed and efficiency, according to analysts.

They are understood to have been recruited by M&S chief executive Marc Bolland, but are expected to report to John Dixon, the executive director for general merchandise.

Their appointment has raised questions internally about the status of Krishan Hundal, the executive with existing oversight of sourcing.

An insider said that his role would continue to be as important as he focused on quality, innovation, packaging, technology, ethical sourcing and delivering on commitments made under M&S's Plan A corporate sustainability project.

An M&S spokesperson confirmed the Lindseys' recruitment.

The move to sharpen its supply chain comes seven weeks after the chain announced disappointing Christmas trading, with like-for-like sales of clothing and homewares down 2.1% in the quarter, despite having overhauled its key womenswear ranges.

Food sales fared better, rising 1.6%.

Mr Bolland said that an "exceptional, unusual and unseasonable" October combined with "unprecedented" discounting on the high street were responsible for the decline in clothing sales.

The decline also came despite a huge two-day general merchandise sale offering 30% off all clothing lines during the weekend before Christmas.

M&S had previously tended to shun such significant pre-Christmas discounts under the leadership of Mr Bolland, although it occasionally ran them under Sir Stuart Rose, his predecessor.

Standard Life Investments, one of the retailer's biggest shareholders, said in January 2013 that disappointing trading meant that Mr Bolland was on borrowed time, although investors have recently been more willing buyers of the shares amid hopes that his strategy is beginning to produce the desired results.

M&S shares closed 1p higher on Friday at 503.5p, while the stock is up by more than 35% over the last year.

The high street bellwether is approaching the tenth anniversary of the most recent takeover bid by Sir Philip Green, the Top Shop and BhS billionaire.

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