Steve Rowe set to lay out recovery plan for M&S

Chief Executive Officer Steve Rowe it set to present his recovery plan for Marks & Spencer next week, a plan which is said to hit the flagging high street retailers where it hurts - its short-term profits.

During the company shareholders meeting on May 25, Rowe will lay out his new strategy for the company, which is likely to include measures to improve the fit, design and quality of its clothing, according to analysts reported Reuters. His plan could also see the high street staple slim down its number of fashion labels, which currently include Indigo, Autograph, Limited, Per Una.

"The general merchandise business has struggled for years to gain any momentum so we'll be looking to see the extent to which Rowe can turn that around and how credible the strategy is," said Simon Gergel, chief investment officer for UK equities at Allianz Global Investors. "We've had lots of false dawns from this company."

Although former CEO Marc Bolland spent billions of pounds on strengthening M&S's supply chain logistics and a new website, analysts believe that the company will end up investing even more to achieve a substantial increase in clothing sales. However, if the retailer continues pumping more money into its logistics and other initiatives and fails to offset it with savings elsewhere, then its short-term profit could be hit.

One area M&S could improve in, in concerns to its fashion offering, is its entry price. According to a survey carried out by analysts at RBC Capital Markets of 18 UK high street retailers, Marks & Spencer's entry price for its fashion offering was approximately 20 percent above the average. Rowe already slashed the price of 315 spring clothing items by 10 to 15 percent, a wise decision which saw a boost in sales volumes as a result, but M&S still has a way to go in increasing its sales.

Analysts also stressed that Rowe should focus on improving product availability, to ensure M&S has sufficient stock of popular items and sizes and invest in its customer service, which now sits below that of rival retailers. However, implementing these changes all cost money.

Photo: Steve Rowe, M&S