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By James Davey
LONDON, July 17 (Reuters) - Steve Rowe's switch from runningMarks & Spencer's food business to heading its generalmerchandise arm could make or break his chances of succeedingMarc Bolland as chief executive, arguably the most prestigiousjob in British retail.
Rowe has led the upmarket food division for three years,delivering 23 straight quarters of underlying sales growth andan outperformance of the wider industry, helping M&S post afirst rise in profit in four years in 2014-15.
However his shift to general merchandise - the 131-year-oldfirm's flagship division, accounting for about two-thirds ofprofit - represents a significant step up. He faces thechallenge of delivering the sustained rise in sales, along withprofit margin gains, that will convince investors the M&Srecovery is on track.
The opportunity came his way when Britain's biggest clothingretailer announced on Thursday that John Dixon - who had beentipped as a possible successor to Bolland - had quit asexecutive director of general merchandise, a position he hasheld since 2012, to become a CEO elsewhere.
Rowe, who has been at M&S for more than 26 of his 47 years,and whose father Joe was an executive director until 2000, hasmade no secret of his desire for the top job, telling Reuterslast year he would love to be CEO.
If he can replicate his food success in his new division,which spans clothing, shoes and homeware, he may get his chance and outmanoeuvre the claims to Bolland's job of Laura Wade-Gery,executive director multi-channel, and finance chief Helen Weir.
EXPERTS DIVIDED
M&S' return to profit was helped by the strong performanceof food and also gross margin gains in general merchandise,driven by improvements Dixon made in sourcing. Its share pricehas risen a quarter over the last year on recovery hopes.
But following Dixon's exit, analysts are divided over thefuture performance of general merchandise, reflectinguncertainty after a dip in its first-quarter underlying salesthis month dealt a setback to M&S' recovery. The division hadseen a return to growth for the first time in 15 quarters in theprevious three months.
Jefferies analysts said Dixon's departure was a blow, butadded: "With Rowe stepping into Dixon's shoes ... we believe theM&S recovery can continue relatively unscathed."
But others were concerned about potential unnecessarytinkering of a strategy that could be on the verge of proving tobe a winning formula. "We fear another period of rebuild andthus underperformance," said analysts at Peel Hunt.
Industry experts had been similarly split over thefirst-quarter slowdown, with most taking the view it reflectedslowing market conditions across the UK apparel sector, butothers saying M&S' ranges were still failing to gain tractiondespite the firm's claims of style and quality improvements.
'POISONED CHALICE'
Rowe is no newcomer to general merchandise; as an18-year-old he started out at fashion chain Topshop and his M&Scareer has included stints in menswear, homeware, beauty ande-commerce. He has served under eight M&S chairmen and six CEOs.
He had succeeded Dixon as head of the food business in 2012,and benefited from lower grocery prices his predecessor hadpushed through. Similarly he may now be poised to reap therewards of the billions of pounds of investment that Dixonoversaw in M&S' clothing supply chain.
In regard to the company's top job, some see Rowe as more awork-in-progress than the finished CEO article.
"In terms of driving the clothing business we have no doubthe would be good at the driving part but we are less certainthat he could act as a catalyst for the positioning and creativework needed to make the game-changing moves needed in women'sclothing," said Tony Shiret, analyst at Espirito Santo.
He also notes that Rowe has had some "difficultinvestor-facing experiences" and needs to "demonstrate a broaderstrategic awareness."
And while clothing gives Rowe the opportunity to shine,there's no hiding place if it all goes wrong.
"He would have been much better placed if he was stillrunning food rather than drinking from the poisoned chalice thatis M&S clothing," said independent retail analyst Nick Bubb.
(Editing by Pravin Char)
