Back in Fashion How We're Reviving a British Icon

Back in 1998, Marks & Spencer was the first British retailer to reach a profit of $1 billion. Just a few years later, profits were down to $145 million, and the company's share price stood at two-thirds of its previous high. The problem, says CEO Stuart Rose, was that M&S lost sight of what had made it great for more than a century. In this first-person account, Rose explains that he was hired in the spring of 2004 to turn the company around just in time to stave off retail investor Philip Green's hostile takeover attempt. He spent his first six weeks convincing reporters, analysts, and investors that he was the one to lead Marks & Spencer back to prosperity. Then, after Green withdrew his bid, Rose put his plans for M&S to work. He knew that three things needed to be done right away: improve the product, improve the stores, and improve the service. One of his first and most important changes was to tighten the reins on inventory. When Rose arrived at M&S, assistant buyers were spending more than $300 million of the company's money without oversight. Management now gets weekly inventory updates. With a keen eye on fundamentals like stock control, Rose has tried to return Marks & Spencer to the levels of profitability it achieved before its sharp decline. Although there is more to do, the company is back on track. In November 2006, M&S posted half-year profits of $405. 1 million--up 32. 2% from the previous fiscal year. Rose attributes the turnaround almost entirely to a renewed focus on core values. Now, with signs of health in the business, he is thinking about where to take it over the next four or five years, so M&S doesn't get stuck as the largest of the small retailers and the smallest of the large retailers in the United Kingdom.