M&S aims to raise the bar with new campaign

Mr Bolland, credited with turning around Bradford-based supermarket Morrisons, revealed the first of these innovations yesterday – a water resistant men's suit.

Under the new Stormwear name, the plan is to introduce a whole range of clothing including chinos and jeans that can resist the rain.

The launch is part of a new 'Only at M&S' campaign that will highlight products that only M&S can offer – whether it's top of the range English apple varieties or a new Italian pasta that can soak up sauce rather than leave it on your plate.

"Marks & Spencer has always taken big steps forward by being special," said Mr Bolland. " 'Only at M&S' will put the bar up, we will always ask – is this good enough?"

At the same time the group plans to ditch low margin areas where it can't offer innovation. The first for the axe is technology and electricals, which will free up space for kitchenware and bedding.

The plans form part of a 850m to 900m investment over the next three years to improve the core UK business, develop the group's online offering and expand into new overseas territories.

Asked whether his plans implied criticism of the former management led by Sir Stuart Rose, Mr Bolland said that was absolutely not the case.

"The company is in very good shape," he said. "Over the past five years the team has made sure products are much better than they were. The brand is in good shape. We have strong foundations to build through evolution not revolution."

He was speaking yesterday as M&S announced a 17 per cent rise in first half profits.

The group, the UK's biggest clothing retailer, said it made an underlying pre-tax profit of 348.6m in the six months to October 2, just above analysts' average forecasts.

UK like-for-like sales rose an impressive 4.4 per cent. Of this food was up 2.6 per cent, a better performance than its supermarket rivals.

General Merchandise rose by 6.3 per cent driven by strong sales in clothing helped by TV adverts featuring model Twiggy, X-Factor judge Dannii Minogue and retired footballer Jamie Redknapp.

About two-thirds of the new investment will be allocated to UK stores.

The group will also step up store openings in the UK with a plan to increase space by three per cent each year until 2015-2016.

The goal is to have 95 per cent of the population within 30 minutes' drive of a full-line store by 2015. The number of Simply Food stores is set to increase as well.

M&S will also improve in-store navigation and add more homewares and foods.

A further 150m will be spent on the group's online business, with a goal to double revenues by 2013-14.

The company is to end its website collaboration with Amazon and build and manage its own new online platform.

A further 150m will go on expanding overseas, with India and the Shanghai region of China the top two priority markets.

M&S said it could fund the programme from existing cash flows, while keeping an investment grade credit rating and a progressive dividend policy.

The group said it expects a tougher second half as rising cotton prices compound a subdued consumer outlook. However, Mr Bolland refused to be drawn on whether this would mean price increases in the New Year, saying that opening price points – the term for the cheapest ranges – would be kept the same. Analysts welcomed the news that M&S plans to save an extra 50m a year from supply chain and IT improvements.

It plans to add 1,000 new lines to its food range by improving the use of space in stores, but will reduce the number of non-M&S branded lines such as Heinz Baked Beans, PG Tips and Kellogg's Cornflakes – a key initiative of predecessor Stuart Rose – to 100 from 400.

Mr Bolland said this would not mean the disappearance of brands, but there will be fewer size variants on offer. He added that branded foods will only play a role where M&S cannot develop its own, better alternative.

In clothing the plan is to stop using the Portfolio brand and turn its ranges into the main M&S brand.

M&S will also invest in sub-brands such as womenswear ranges Per Una and Indigo Collection through improved marketing and clearer positioning in stores.

Thumbs-up from the city

THE City generally welcomed Mr Bolland's first strategic outline yesterday.

Neil Saunders, consulting director at retail analyst Verdict, said: "The update gave us a first glimpse of Mr Bolland's architectural blueprint, and the plans look extremely sound. While they do not represent a radical departure for the company, they show a very sound grasp of the fundamental issues M&S needs to address."

But Keith Bowman at Hargreaves Lansdown said the new strategy comes with risks.

"The M&S brand has relied on an ageing customer base for some time now, with Mr Bolland hoping that he can excite younger fashion-orientated consumers," he said.

"A move away from big branded food products could diminish the potential to increase the company as the destination for the 'big weekly shop'."