Stuart Machin admits he has a healthy amount of paranoia about M&S's performance. Photo: Daniel Lewis
Stuart Machin has Waitrose firmly in his sights. Like most well-trained and carefully led corporate leaders of the 21st century, the CEO of Marks & Spencer avoids discussing competitors as much as possible.
However, with its main rival only a hair ahead of the latest market rankings and the Middle England grocer's crown within reach, the temptation is too great.
“You could argue that we should have overtaken them by now. — Machin smiles. “I might even argue that internally.”
It's “positive grievance” that Machin has made M&S's doctrine since he was appointed chief executive two years ago. No matter how good he feels, he believes he could do better. This also applies to everyone else.
“Every day I feel a healthy paranoia about things not getting done,” he says. “I have this anxiety, but I don’t think it’s a negative anxiety. It doesn't scare me. I feel energized by this.”
To be honest, it's been a long time since the 140-year-old M&S company has looked this busy.
The institution has endured since the turn of the century, seemingly inexorable decline, endless modernization efforts and repeated false dawns.
The company narrowly avoided disaster in 2004 by fighting off a hostile takeover by Sir Philip Green. In 2019, it was demoted from the FTSE 100 for the first time since the blue-chip index was founded decades earlier.
The turnaround was sharp. Since Machin, 53, was appointed chairman by Archie Norman, the share price has more than doubled, M&S has returned to the FTSE 100 and won back investors in the City of London who are tired of its broken promises.
M&S's latest annual financial results, published 10 days ago, highlighted the transformation. Crucially, sales rose in both food and clothing and across most of their categories.
Profits jumped 41 percent to £673 million, beating City forecasts and boosting hopes that M&S will soon reach the £1 billion mark. mark for the first time in 15 years.
The retailer ended the year with the equivalent of £46m in cash, compared with net debt of £356m a year earlier. This allowed him to claim that he is in his best financial condition since 1997. Rachel Reeves can't hope to inherit a national balance sheet as strong as the one Gordon Brown inherited, but at least M&S will be able to pay its bills.
Rising profits are celebrated for staff on large screens in the main office lobby near Paddington station. Machin, who is well aware of M&S's recent past, doesn't seem too keen on the chest-thumping display.
“I think we've been caught in the past,” he says. “That's why I'm a little worried. We are on the right track. But that doesn't mean we're finished. This doesn’t mean everything is great.”
For Machin, absolutely everything should be wonderful. He is, in business-speak, an eye for detail and at the moment seems to get more job satisfaction from the new breakthrough in the store's breakfast offerings than from last year's profits.
“Our director of product development just brought me what she calls “Stuart's Breakfast Smoothie.” It took us a little longer to get it right, but God bless her, she worked hard and now has the right level of cinnamon. The dates are correct. The texture is right.
“It doesn't mean I sign off on every product, but I like to have an idea.”
He notices the raised eyebrows. “Listen, I'm obsessed with everything we sell.”
Later this year, the same approach will see the introduction of a revamped pizza range after a year of development (“I didn’t think our pizzas were good enough. They were good compared to everyone else, but how do you get the best pizza in the country?”). Premium ready-meal line Gastropub will also be relaunched with fanfare for its 20th anniversary in September.
wants Machin to focus on improving in-store service, from suit fittings to bra specialists. Photo: Daniel Lewis
Machin's obsessions force him to wake up at 4:30 a.m. and read the news and internal reports for two hours before making calls. Machin is spending his weekends shopping and dressing from head to toe in M&S after his menswear team finally unveiled a pair of stylish sneakers that have won his approval.
Shopping was Machin's life. He started working in the industry at 16, pushing trolleys around his local SavaCentre in Kent. The small hypermarket chain was a joint venture between Sainsbury's and BHS.
He worked for Sainsbury's for 16 years and went on to manage 180 stores in the South. Shorter stints at Tesco and Asda followed until Machin emigrated to Australia in 2008 to rise through the ranks of retail group Wesfarmers for eight years.
It was in Australia that his attention to detail won Archie's trust. Norman, long-time consultant to Wesfarmers. Norman, now 70, a turnaround specialist with his own reputation for keeping a tight rein on business (the investment bankers at Lazard UK, where he was chairman, joke about his emails criticizing topiary in the Mayfair offices), groomed Machin for M&S. /p>
“I couldn’t have a better chair because there’s trust,” he says. “It's brutal honesty. And, of course, we both like details.”
In previous roles, such as chairman of ITV, Norman clashed with management teams who felt he was going beyond his non-executive role. However, it appears that progress at M&S and his discovery of a kindred spirit in Machin have allowed him to retreat further.
“His role has changed a little bit, I think he would say so,” Machin says. “Because he's definitely more like a chairman now. But we definitely look at it as one team. Every week we have meetings where I have to be honest and share everything. What I love is direct conversation. It's very useful.”
M&S last year regained its status as the leader of the British women's clothing market after four years out of the top spot, overtaking Next.
What is most pleasing, and noted with admiration by his high street colleagues, is how he has managed to once again attract young shoppers with both coveted fashion pieces and the easily accessible quality basics on which his empire was built. Women under 30 accounted for a third of lingerie sales last year, double the amount in 2022.
Machin says the best will come this summer and longer term by Christmas.
“Our prices will remain the same from year to year. That's what we try to stick to. But I think the style and quality of the products have increased significantly this year.”
Machin is looking to improve customer service in the areas that matter, with a multi-million pound investment in bra and suit fitters.
“What I really want to achieve in the next 12 to 18 months is a bit more service, a bit more sales and service,” he says.
“It’s someone you can talk to and someone who can help you with your suits. It’s easy for me because I know every piece and I know my exact size. I know where I’m going, what I want and I’m all set.”
“But in fact, when we have people helping customers with their suits, our sales triple. So I think we still have a lot to do in this direction.”
The work is being carried out in time for M&S's regular collaboration with the England football team at Euro 2024 in Germany.
Footballers Conor Gallagher, Marcus Rashford and Aaron Ramsdale show off their official England team clothes. Photo: M&S
Such window dressing complements much more fundamental changes that are crucial to the revival of clothing. M&S has cut the number of suppliers it uses and streamlined its own distribution network to help reduce stock shortages that infuriate even its most loyal customers. A new merchandising system is on track to support these changes.
While he was directly in charge of the food business, Machin launched another radical overhaul, buying its largest logistics provider Gist for an initial payment of £145 million and taking control of its supply chain for the first time. He also launched a new forecasting and ordering system.
“I did the easy part,” he laughs. “I just made deals to get him. Now the team has to make it work. To be honest, we are just starting to do this.
“Five years from now, when we have fixed our networks, our supply chain, improved ordering systems, improved accessibility, reduced waste, reduced working capital, it will be very interesting for us.”
Technology and the transition to online shopping has been a frequent stumbling block for M&S over the years. Last year, Machin stopped many projects to refocus on rebuilding the business so it had a foundation to build on, such as the right data about its customers.
Online sales accounted for 32% of its clothing and homeware business last year, with M&S setting a “long-term” target of 50%. Meanwhile, Machin's team is working to restructure key components such as the Sparks loyalty scheme.
“It's not that we're necessarily doing the wrong things, it's just that it's been quite slow,” he admits. “We believe there is greater opportunity for growth on the Internet than we currently have.
“We want customers to shop in a more digital way, we want the app to be simpler. We want it to be more interactive. On Saturday I'm standing in the store, looking at the customers shopping, wearing women's clothing, wearing jeans, and I don't know what to buy. People need help. Our size chart is not good enough.
“If you use Sparks, we can say, well, it's your birthday, £20 off your next suit because we know you like suits. We can do this now, but not for everyone, and it is very difficult. We don't have all the data sets.” Machin insists Sparks will not be the only way to get better prices at M&S supermarkets, as has become common practice amid the cost of living crisis among its rivals. “That's what I call sneaky pricing,” he says.
Another online retail area to watch is the joint venture with Ocado, which supported M&S's late entry into online grocery shopping. Tim Steiner, chief executive of Ocado, said M&S was wrongly withholding performance payments and threatened legal action. Machin says the joint venture has performed poorly, leaving M&S with a loss of £37 million, with no payout due.
“We are taking all the necessary advice and I am absolutely clear: We are quite clear that this figure has not been reached and therefore no payment is required.
“We have a responsibility to negotiate in good faith. And we have them.”
City skeptics of M&S's turnaround (who, it must be said, are an increasingly rare breed) whisper that Machin may just be a lucky general. He arrived at a time when the main competitors of both of the company's main businesses – John Lewis, Waitrose, Debenhams, House of Fraser – were in financial difficulties or had disappeared from the high street entirely.
Machin wouldn't argue with that. .
“There is no doubt that no matter how many headwinds we had, there were also tailwinds. I will tell the team: if you have performed poorly, you will not be able to make the most of this opportunity.
“If there is a competitor at the moment that is not so strong, we will of course try our best and try to win the share of M&S.” .
M&S plans to open more than 100 new Simply Food" stores as they seek to capture a larger share of the grocery market. Photo: Holly Adams/Bloomberg
Much of M&S's market share growth in the grocery business was driven by the opening of new stores and the conversion of clothing spaces in existing stores. In 2022, Machin announced that by 2028 the number of “full line” (i.e. food and clothing) stores would be reduced from 247 to 180, while opening more than 100 new “Simply Food” stores in parallel.
While sometimes controversial, the move to more modern premises could have a powerful effect on the retailer, which is still based on two-fifths of pre-World War II properties.
Last year, M&S moved its store in Liverpool city center into a modern building, reducing the clothing space by 39% and the food space by 18%. However, the number of customers increased by a quarter, and on average everyone bought more.
“It’s about the quality of the location and the quality of the building,” says Machin. “This is not about getting off the main streets. Our problem is that many of our old stores are really outdated. Spending money on upgrading them will never break even.”
Instead, Machin is now trying to speed up the move to new premises. At the moment, he plans to complete construction of only 26% of the estate by the end of this year.
“I said we need to act faster. We don't want to make mistakes. But can you imagine when we made half of the estate? Or when will we reach my goal of 180 full-line flagship stores and over 400 proper format grocery stores? This growth will be very encouraging.”
London's Oxford Street has become the epicenter of Machin's real estate frustrations. There, former Housing Secretary Michael Gove thwarted his attempts to demolish and rebuild the 1929 Art Deco store in Marble Arch. In March, the High Court overturned his decision, and the next step now lies with the next government.
“We need it all gone,” says Machin, who has become increasingly outspoken about the scandal, which he sees as symbolic of the decline of Oxford Street as a shopping destination.
“I hope that whoever is in government, be it Conservative, Labor or whoever they listen to, I hope that any government will be pro-business and pro-growth. I said that being a business leader under that government was like running down an escalator with a backpack on your back, and I stand by that.”
Looks like the Conservatives might not get his vote? “I’m not going to tell you who I’m voting for,” he laughs. It's worth a try.
Such a public fight with Whitehall is very typical of the new M&S, which no longer has the same respect for hierarchy and the intensity that seems to flow directly from the Machines into the business. Colleagues joke that his full last name is Mashina.
“I’m a bit of a rebel about hierarchy. We don't really like it. We just want to do what works for M&S and I don't like tiered approvals. I don't mind anyone going and talking to the board of directors. Mary at the checkout has as much a say as I do, and everyone can have their say.”
He insists he does enjoy work-life balance, but says he was raised by his mother. who has made a successful career in economics. ownership has created a pervasive “paranoia” that he often refers to.
“I have a feeling I'm going to have to work a little harder than anyone else. I think you are reaping what you sow. If you're paid well and you've taken on responsibility, you should invest more in it.”
He seems sensitive to the risk that some colleagues might find his style too flamboyant. Is there a potential sense of control freakishness?
The eyes are narrow. Lip bag. – I don't know what you mean. Then a smile. “I think we all like to be in control.”
Recent Comments