Questioned on whether he was among the candidates to replace Sir Stuart Rose as chief executive of Marks and Spencer, Marc Bolland said: “I love Morrisons. I am happy where I am.”
Obviously the affair is over.
November 18, 2009.
Marks and Spencer Group plc today announces the appointment of Marc Bolland as its new Chief Executive. He will take up his position in the New Year at a time and on terms to be confirmed. Marc, 50, joins from Morrisons where he was Chief Executive.
Marc Bolland said, “M&S is one of the world’s great brands and I am very pleased to be given the opportunity to lead the company forward at this exciting stage. I am greatly looking forward to working closely with Stuart and the M&S team.”
Hmm.
And the market reaction:
Clearly a surprise for both sets of shareholders.
What’s also a surprise is that M&S – unlike ITV – has not revealed the pay package of their new hire. Presumably, it will have paid a pretty penny to lure the highly-rated Dutchman to the Paddington basin. Note, Bolland leaves Morrison with £4m of unvested Morrison shares.
We await the details with interest.
Update:
Here’s Merrill Lynch’s take on the appointment:
M&S has announced that Marc Bolland will be its new CEO as from the New Year. We view this as a big positive for several reasons: 1) He has a strong reputation in the market, particularly in terms of consumer marketing expertise; 2) It lifts the uncertainty over the CEO position that had been rumbling for several months; and 3) It opens up a potential new investor base for M&S, as several investors had been put off by the unusual corporate governance structure since mid-2008.
In terms of what Marc Bolland will bring to the role – 1) We expect him to improve the marketing of the company and to continue to reposition the food and non-food offers closer together. 2) We expect him to enhance the value credentials of the food business, which still suffers from poor customer price perception despite our recent price surveys showing an increase in price competitiveness. 3) We think he will develop the M&S business internationally, both in non-food and in food, in a more concentrated way than historically, with proper supporting infrastructure. 4) He may choose to accelerate the systems and IT initiatives that aim to achieve c.£175mn of net cost savings over the next five years. Sceptics may point to Bolland’s lack of clothing experience, given his Morrisons and Heineken background, as M&S, in profit and share price terms has always been a clothingdriven business. However, similar criticisms were levied at Robert Polet when he took over as CEO of Gucci Group in 2004, having been head of Unilever’s ice cream and frozen foods division, and he has dramatically improved its profitability since then. The biggest risk is a stream of management departures, but we see this as unlikely.And Execution:
The earlier than expected appointment of Marc Bolland, Morrison’s CEO, as the incoming CEO of M&S is good news in our view. Although Bolland lacks clothing and online experience, his motivational leadership style and FMCG marketing experience should stand him in good stead. We also believe he will work well with Sir Stuart Rose during the transition phase, though we anticipate further management change. Nevertheless turning around M&S is likely to be harder for Bolland than Morrisons was. We await further details of a new and accelerated strategy but in the meantime raise M&S to a Hold and our fair value to 400p (c. 14x forward EPS).
So the appointment of the charming Bolland is an exciting development for M&S (and we assume he will be handsomely rewarded since he will leave £4m worth of Morrison shares unvested), but is not without risks. We expect Bolland will try to speed up M&S’ 2020 change program and will seek further cost cuts. But the bigger issues about where the M&S’ food offer sits with the consumer (should they try and be a one-stop shop, and if not, is there a better use for the space?) and how to tackle online and international growth remain. We look forward to Bolland’s first strategy announcement next year (he is due to remain at Morrison until their financial year end (Jan 2010). In the meantime we raise our recommendation from Sell to Hold and raise our fair value to 400p (based on 14x calendar 2010 EPS which blends our concerns on the UK consumer with the possibility of a food turnaround
Related link:
M&S names Bolland as new chief – FT