Speculation over M&S succession as clothing head Dixon exits

John Dixon, head of general merchandise at M&S, is leaving to take the top job at an as-yet unknown company.

Shares fell 1.5 per cent in early trading on Friday following the announcement.

Mr Dixon - who took charge of the retailer’s clothing, shoes and homeware division in October 2012 - has stepped down from the board and will leave the company at a date to be agreed, M&S said.

Steve Rowe, who currently leads M&S’s successful food business, will take Mr Dixon’s role.

Analysts said Mr Dixon’s departure throws a spotlight on who will succeed chief executive Marc Bolland.

Tony Shiret at BESI Research said it seems “more widely accepted” that Mr Bolland will also leave the retailer in the coming months, regardless of the performance of its Autumn/Winter clothing line.

While some industry watchers suggested Mr Rowe is now in pole position for the top job after 26 years with the retailer, others said the move could damage his chances.

Independent retail analyst Nick Bubb said: “I think the odds have just lengthened. Steve Rowe would have been much better placed if he was still running food rather than drinking from the poisoned chalice that is M&S clothing.”

Mr Rowe himself has made no secret of his desire for the top job, telling the press last year he would like to be CEO.

Mr Rowe is one of a number of internal candidates for Mr Bolland’s job. Laura Wade-Gery, executive director for multi-channel, Helen Weir, the new chief finance officer, and womenswear head Belinda Earl are also considered by analysts and investors to be candidates to succeed Bolland.

However, Mr Shiret said BESI Research feels none of these are up to the job.

Mr Dixon headed M&S’s food business for four years before being promoted to head up the non-food business. He was considered to be a candidate to succeed Bolland as chief executive, but his star has waned as M&S struggled to deliver a sustained increase in underlying clothing sales.

Less than two weeks ago, the retailer posted disappointing sales figures for its non-food division, after cold weather in May dampened demand for its Spring/Summer fashions.

General merchandise like-for-like sales fell 0.4 per cent in the 13 weeks to June 27.

By comparison, group’s food like-for-like sales lifted 0.3 per cent during the period.

This month’s dip in sales reversed its Q1 fortunes, when its clothing sales returned to growth for the first time in 15 quarters.

Mr Rowe’s credentials for the CEO job have been enhanced by 23 straight quarters of underlying sales growth in food and an outperformance of the wider grocery market.

But speculation over an imminent chief executive succession may prove to be just that.

In May, Mr Bolland - who took them helm in 2010 - said he “absolutely” expected to present financial results in May 2016.

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Marks & Spencer can hopefully avoid the “uncertainty and strategic hiatus” that usually follows management changes, analysts have suggested.

Tony Shiret, analyst at BESI Research, said new leadership “tends to presage a period of introspection by the new person”, followed by a statement of their intentions.

He said: “Against this the market will try to work out for itself whether the new person is likely to provide new momentum and address any perceived issues affecting company delivery/prospects.”

However, Mr Shiret said it is “possible” that any future chief executive appointment “will come against the backdrop of successful delivery against the current strategy”, meaning less need to change direction.

While Mr Dixon’s exit is a “blow” to M&S, analysts at Jefferies were optimistic, saying: “[W]ith Steve Rowe stepping into Dixon’s shoes, we believe the M&S recovery can continue relatively unscathed.”