M&S must innovate to survive, warns veteran

Luc Vandevelde, who was at M&S from 2000 to 2004, told the Yorkshire Post the company must "renew the model and renew the brand" or risk dying with its older customer base.

Mr Vandevelde said "nothing new has come to the party" since he and former chief executive Roger Holmes launched the Autograph, Per Una and Simply Food concepts during their tenure.

"M&S still has a great future but you have to have the courage to make some fundamental new innovations," he said.

He described the new chief executive Marc Bolland as a first-class retailer but said "M&S is an old lady who is hard to move" and warned the former Morrisons boss that "execution is going to be very tough".

"I'm sure he has got all the opportunities to improve the brand – if he gets the support of the board and shareholders," added Mr Vandevelde.

M&S said it completely disagreed with his comments and the business is completely different to how it was in 2004.

The Belgian, a former chairman of Carrefour, underlined his retail credentials yesterday when his private equity group sold its majority stake in Republic, the Leeds-based fashion chain, in a deal worth 300m.

Mr Vandevelde and Mr Holmes bought into Republic in 2005 in a transaction that valued the business at 105m. The sale to TPG Capital, the American private equity giant, represents a return of nearly 4.5 times their original investment.

Tim Whitworth and Carl Brewins, the management team, will continue to run the business and remain significant investors, it was confirmed yesterday.

Republic doubled in size in the last five years, with turnover rising from 100m to 200m. The company now operates 105 stores throughout the UK.

Mr Vandevelde said the business is a "category killer" and was largely immune from the recession due to a young target market unencumbered by mortgages and protected from economic forces.

He said the company's success came from Mr Whitworth's ability to spot fashion trends in combination with Mr Holmes' strategic input and operating expertise. "It's a stellar investment," he added. Steve Petrow, the managing director of Change Capital Partners, said: "We are proud of what we have achieved with Republic. Together with management we have been able to grow the business considerably."

In a statement, Mr Whitworth, the chief executive of Republic, said: "Republic is a tremendously successful fashion retailer occupying a truly unique multi-brand position in the market. We are very excited to be working with our new partners TPG and look forward to continuing the evolution of the Republic brand."

TPG Capital has $48bn under management with past and present retail investments in Debenhams, J Crew, Burger King and Neiman Marcus.

Dag Skattum, a partner at TPG, said: "Republic is an exciting retail brand and one with significant further potential. We are pleased to be investing alongside the existing management team."

Martin Jenkins of Deloitte, Stephen Griffiths of Rothschild and Yunus Seedat of Addleshaw Goddard advised the management team.

Stories of success

They both occupy very different markets, but as retail growth stories Republic and Card Factory are hard to beat.

Both from West Yorkshire, these two companies have used a similar strategy to become the best at what they do. Both, in the business jargon, are category killers. And both have been sold this year for large sums of money.

Although those involved in yesterday's Republic deal did not want to talk numbers, it is understood TPG acquired the young fashion firm in a deal worth 300m. This comes a few months after Charterhouse took control of The Card Factory in a deal said to be worth 350m.

It is worth pointing out here that another retail success story has its roots in Yorkshire. Marks & Spencer can trace its origins to a market stall in Leeds.