M&S's make-or-break clothing strategy gets early thumbs-up

Fashion media and analysts broadly welcomed Marks & Spencer's new clothing strategy and a preview of autumn/winter fashion ranges, giving the firm's boss some respite from pressure over falling sales.

Britain's biggest clothing retailer said on Tuesday it would focus on better quality and styles in womenswear, deliver more compelling and clearer sub-brands, and make shopping easier in stores, as it tries to reverse nearly two years of declining sales.

On Wednesday, shares in the 129-year-old firm, up 20 percent over the past year after periodic bouts of bid speculation, rose up to 4 percent, hitting a five-year high of 438 pence.

However, bookmaker Ladbrokes still made Chief Executive Marc Bolland odds-on at 8/11 to have left his position by the end of the year.

"The changes outlined contained a variety of enhancements based on detailed customer feedback that even the bears will find hard to completely ignore," said analysts at N+1 Singer, arguing that investors should not underestimate the potential from the changes if they gained traction.

M&S will present the autumn/winter ranges to the bulk of Britain's fashion media on Wednesday and Thursday but some key fashion editors have already viewed the ranges and like them.

Lisa Armstrong of The Daily Telegraph called it "the most convincing effort I've seen for a long time," The Times' Laura Craik said "M&S is back in the game," and the Guardian's Jess Cartner-Morley said the collection "could be a high street game changer."

Liz Jones, the influential fashion columnist at the Daily Mail newspaper, had a sneak preview last week and said she was "pleasantly surprised", praising much improved quality.

UNDER PRESSURE

Bolland, CEO since May 2010, is under pressure from investors to revive M&S's clothing business, which has reported seven straight quarterly falls in underlying sales.

The autumn/winter ranges are widely seen as make-or-break for a new general merchandise team, assembled by Bolland and led by John Dixon, the former boss of M&S's food business, and Belinda Earl, the former CEO of Debenhams and Jaeger.

Bolland has repeatedly said the new team will not make a major impact on sales until the ranges start hitting the shops in late July.

But on Tuesday, he cautioned the market not to expect too much too soon. "This is a step in the right direction. The one thing that we want to be very clear on is that it's a step by step approach," he said.

Independent retail analyst Nick Bubb remained skeptical, given M&S's recent history.

"We were disappointed about the dichotomy between Bolland's view that all major store revamp work will be completed this financial year and Dixon's evident frustration with the clutter and poor presentation standards of the stores," he said.

And while analysts at Credit Suisse said the strategy seemed mostly sensible, they questioned how reinvesting in quality would be paid for.

"As with last week's logistics presentation we are left thinking this may well be the right change in management and strategy, two, or more, years late," they said.

Next week Bolland will present M&S's 2012-13 results, with analysts on average forecasting a 7 percent fall in pretax profit to 658 million pounds ($1.0 billion), according to a poll on the company's website. That would be a second straight annual decline, although the dividend is expected to be maintained. ($1 = 0.6554 British pounds)

(Reporting by James Davey; Editing by Helen Massy-Beresford)