Marc Bolland is working to put the spark back in M&S

Marc Bolland is working to put the spark back in M&S

The analyst response to Marc Bolland's strategic review of UK retailer Marks and Spencer has been largely positive, with one analyst describing the plan as "putting the spark back into Marks".

The plan, which Bolland has repeatedly described as "evolution not revolution", will mean a wide range of changes for the retailer in the coming years, with the company planning to invest GBP900m (US$1.44bn) in developing both its UK operations.

Datamonitor analyst Neil Saunders said Bolland had inherited a company that has a "stable foundation", adding that the main challenge for the new CEO is demonstrating "what and how he is going to build on it".

Bolland revealed plans to scale back on the number of food brands M&S sells in the UK, to refresh its domestic stores, and to plan to continue expansion in India and China.

"If Marc Bolland can build the vision he has set out today, he will firmly but the spark back into Marks," Saunders said of the plans.

In an analyst note from RBS, its retail team described the plans as "sensible" and "non confrontational" in terms of shareholders' perspectives "given the preliminary focus on the UK to drive an additional GBP1-1.5bn of revenue".

Meanwhile, Hargreaves Lansdown Stockbrokers equity analyst Keith Bowman said the move shows how Bolland is "hoping to draw on his own strengths in marketing in order to inject change and accelerate growth at M&S".

In its food division, Bolland is looking to reposition the retailer as more of a specialist, with all products to be marketed as 'Only at your M&S'.

As part of this, the retailer is scaling back its branded product range from 400 SKUs down to around 100. "Twenty per cent of the brands are doing 80% of the work," Bolland said. He added that the reductions would be to the number of SKUs for each brand, not the number of brands.

"On food, it is right that M&S focus on quality, innovation and creating destination status. That was M&S's heritage and it is the ground it needs to win back," Saunders said.

This expansion of the food range, Bolland believes will mean that more customers are able to do a "fuller weekly shop", expanding beyond the company's reputation as a top-up and convenience operator.

However, Bowman highlighted the risks the retailer faced in its shift away from branded food products, which might "diminish the potential to increase the company as the destination for the ‘big weekly shop'."

The only area where analysts were seriously divided was in M&S's lack of movement towards online grocery retail.

Bolland said yesterday the retailer will study the channel over the next three years, but emphasised that he is "not in the business of losing money" and will look for a "viable business model". He added that the retailer faces a different set of operating conditions to the other major UK retailers, with its average basket sitting at around GBP35-40 compared to GBP100 or more for its competitors.

The RBS note said the strategic review was "not revolutionary in terms of introducing food online with delivery".

Meanwhile, Saunders lauded its decision to not rush into the online arena. "That Marc Bolland has resisted the vanity of turning M&S into a full line grocer or developing an online offer makes complete commercial sense," he said.

The analysts all agreed that M&S faces a hard road ahead as it works to implement these plans.

"While there is no denying that the plans will take time to deliver, and will no doubt will cause some pain in terms of execution along the way, they move M&S in the right direction and will help create a stronger, more ambitious business that has greater relevance and resonance on the UK high street and beyond," said Saunders.

RBS added: "As for M&S, we see short-term weakness although appreciate the longer-term benefits in terms of return on invested capital, earnings and implied share price performance. Jam tomorrow, not today!"

Shares in the company had fallen 2.7% on yesterday's close to 394.9p at 15:16 GMT today.