M&S chief goes out on a high as profits surge

oUTGoING Marks and spencer boss steve Rowe yesterday left on a high after unveiling bumper profits.

The M&s lifer stepped down after six years as chief executive as it posted its highest annual profit since 2016.

Capping a career that took him from the shop floor to the helm of the business, Rowe said profits in the year to April 2 hit £391.7m, swinging back from a £209.4m loss in 2020.

sales hit £10.9bn, up from £9.2bn a year earlier and higher than pre-pandemic levels.

Rowe joined the retailer in 1983 aged 15 as a saturday boy and spent nearly 40 years at the high street stalwart.

The performance was driven by M&s’s first full year of clothing growth in over a decade as well as bumper food sales.

It was a testament to the success of M&s’s transformation, kicked off by Rowe in an attempt to revive its brand, restore its relevance and turn around sales after years of decline.

But Rowe did not declare victory, instead saying he has overseen the completion of phase one – ‘fixing the basics’. He said: ‘When I took over the reins, I committed to tackling the underlying issues that had eroded the strength of the business and building the foundations for future growth.

‘For me, what is important about these results is not just the restoration of profit and strong cash flow: it is that they demonstrate that M&s has fundamentally changed.

‘While there is much more to do, [it] has moved beyond proving its relevance and has the opportunity for substantial future growth.’

But despite transforming M&s the share price has languished under Rowe, falling by 54pc during his spell as chief executive. Under his predecessor Marc Bolland the share price fell by 8pc as he battled declining clothing sales, while under stuart Rose – who was chief executive between 2004 and 2010 – the share price dropped by 40pc.

This was despite Rose successfully seeing off takeover bids by Philip Green for the company.

Rowe is being replaced by M&s’s head of food stuart Machin, and co-chief executive Katie Bickerstaffe, its head of clothing and online sales. Alongside finance boss Eoin Tonge the trio will continue the ‘shaping the future’ phase of the transformation.

But it was not all upbeat and Rowe warned that when the excitement of the Jubilee and summer holidays fade, consumers are going to seriously tighten their belts.

He echoed warnings on inflation from chairman Archie Norman last month, saying yesterday that M&s’s costs were rising between 5pc and 9pc – ‘a chunk’ of which will hit shoppers. It has already hiked prices 6pc, and as materials including cotton soar in price it expects to put up clothing and homeware prices over summer.

And M&s warned profits will fall this year because of a £31m hit from scrapping its Russian business.

AJ Bell investment director Russ Mould said: ‘There was a chance that steve Rowe would leave M&s on a sour note, given the pressures on household finances and how that might have hurt sales.

‘Fortunately, the retailer has been pleasantly surprised with its fullyear results showing resilience which the company arguably lacked before Rowe became the boss.’

M&s shares jumped 4.8pc, or 6.4p, to 138.65p.