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* Autumn/winter ranges hit stores Thursday, main push Sept
* Under pressure to reverse 2 yrs of clothing sales falls
* CEO could make up to 5.7 mln stg in 2013-14
* Capital expenditure set to fall
* Profit, dividends forecast to rise
By James Davey
LONDON, July 23 (Reuters) - Marks & Spencer Group Plc chief Marc Bolland has plenty riding on the Britishretailer's new clothing ranges which hit the stores on Thursday.
Linger on the racks and Bolland could be out of a job nextyear; set the tills ringing and he may yet stay in the top postto reap the benefit of the firm's top-to bottom modernisation.
The Dutch national, chief executive since May 2010, is inthe final year of a three-year, 2.3 billion pounds ($3.5billion) plan, addressing decades of under-investment to makeM&S an international retailer connecting with customers throughstores, the Internet and mobile devices.
So far his efforts have been insufficient to preventclothing sales falling for eight straight quarters, despiteearning him a bonus that rose 25 percent to 829,000 pounds in2012-13.
Bolland has said the company's revival will be a step-by-step process but it has to start somewhere. So customer reactionto this week's deliberately more upmarket blouses, coats anddresses will be particularly important.
Redesigned stores are being rolled out across M&S's chain of766 British outlets, while logistics and IT systems are beingoverhauled to improve product availability and complement a newweb platform set to go live in spring 2014.
"We're transforming our business to secure future growth,"said Chairman Robert Swannell.
For sure, Bolland has had some successes at the 129-year-oldcompany. Its upmarket food business has enjoyed 17 consecutivequarters of underlying sales growth and contributes 54 percentof group sales; online sales growth is running ahead of themarket and solid progress has been made overseas.
Yet group profit has been held back by general merchandise,spanning clothing, footwear and homewares, which has postedeight straight quarters of like-for-like sales declines.
Though Bolland, a former CEO of grocer Morrisons,has recently received several endorsements from his chairman, hehas to deliver with the new ranges, particularly in womenswear.
GOLDEN KEY
"Investors will be looking for an upturn in generalmerchandise sales by the end of the year," one of M&S's top 10investors told Reuters on condition of anonymity.
Getting womenswear firing on all cylinders is, according toM&S clothing head John Dixon, "the golden key to the goldendoor," given the halo effect it has on the entire M&S business.
Achieve strong sales of the autumn-winter ranges, followedby a better spring/summer campaign, and Bolland couldpotentially notch up pay and bonus awards of up to 5.7 millionpounds in the 2013-14 year.
But failure to deliver will likely increase pressure for aleadership change and could encourage private equity orsovereign wealth fund suitors to take another look at a possiblebid for M&S, long a rumoured takeover target.
Founded by Michael Marks as a Penny Bazaar in Leeds,northern England, in 1884, M&S now turns over 10 billion pounds,operating from nearly 1,200 stores in over 50 countriesworldwide and employing almost 82,000 people.
It remains clothing and footwear market leader in Britainbut its share has slipped to about 11 percent in value terms,eaten away by rivals such as Next, John Lewis and Primark, along with Internet-based sellers.
Management strife and the economic downturn have also takentheir toll.
Yet M&S shares have increased 47 percent over the last yearand hit a five-year high in May, reflecting its potentiallyimproving prospects as well as bid speculation. They trade on13.9 times forecast earnings, below Next on 14.7 times but aheadof Debenhams on 10.2 times, according to Reuters data.
Though M&S has posted two straight years of falling profitsand analysts on average forecast just a 1 percent increase to670 million pounds in 2013-14, they are forecasting jumps of 14percent and 10 percent in the following two years respectively.
CAPEX BILL
Also M&S's dividend, 17 pence per share in 2012-13, isforecast to rise 24 percent over the next three years.
Having peaked at 821 million pounds in 2012-13, M&S's annualcapital expenditure bill will fall to about 550 million poundsfrom 2014-15, giving it a material improvement in free cash andinvestors the prospect of share buybacks and one-off payments.
"If such a fall in capital expenditure corresponds withsteps forward in trading profitability, then M&S shareholderscould be in for a demonstrably more rewarding time," saidanalyst Clive Black at brokerage Shore Capital.
Yet it is the goods in its stores which will make thedifference between success and failure for Bolland.
The CEO is banking on a clothing strategy focused on higherquality and more style satisfying M&S's core 45-years-and-overcustomers while also appealing to younger shoppers.
M&S has promised longer hemlines, 80 percent more dresseswith sleeves, bolder colours and more silk and cashmere.
Autumn/winter ranges unveiled in May won mostly positivereviews from analysts and the fashion press.
The collection will arrive in stores and online fromThursday with a full launch and advertising push in September.
Investors will want to see evidence of improvement whensecond-quarter sales are published on Nov. 5, while a muchimproved Christmas performance to be reported in January isimperative for Bolland's survival.
"As long as they are moving in the right direction, whichthey appear to be in a lot of things, they have a good chance ofmaking it work overall," said one of M&S's top 40 shareholders.
"The other thing that is slowly working in their favour isthat the UK economy is starting to do a little better."
