M&S WILL TRY EXECUTIVE SHUFFLE ONCE AGAIN

JAMES FALLON

LONDON [FNS] -- Marks & Spencer went back to the drawing board, yet again, last week with another major management shakeup that saw the departures of Peter Salsbury, chief executive officer; Guy McCracken, head of international operations, and Clara Freeman, U.K. retail division chief.

Marks & Spencer, a leading food and apparel retailer in the U.K., sole food retail operation in the U.S. is Kings Super Markets, a 25-store chain based in Parsippany, N.J.

The retailer said Luc Vandevelde, its executive chairman, also would assume the role of CEO, effective immediately. Vandevelde, who joined Marks & Spencer in February from French retailer Promodes, replaces Salsbury, who initiated Marks & Spencer's restructuring but, according to industry observers, was unable to effect substantial improvement in a weak business climate.

While Salsbury's departure had been expected, observers said the surprises were the resignations of McCracken as director of the group's international retail, business systems and information technology operations, and Freeman as director of its U.K. stores and group personnel.

McCracken is being succeeded, effective immediately, by David Norgrove, who currently is chairman of Marks & Spencer's ventures division, responsible for identifying opportunities for alliances and joint ventures. Norgrove's joined Marks & Spencer in 1988 following stints in the British government. His previous roles at the retailer include director of Europe, head of worldwide franchising and head of men's wear and strategy.

Roger Holmes will succeed Freeman as head of Marks & Spencer's 297 U.K. stores. Holmes currently is CEO of the consumer electronics stores of Kingfisher PLC. His starting date at Marks & Spencer has not been confirmed.

In announcing the changes, Marks & Spencer revealed its performance continued to deteriorate in the 24 weeks to Sept. 16, with same-store sales down 1.2%. Including new stores, Marks & Spencer's overall sales rose 0.8% during the period.

During the 24 weeks, the company reported the need to take greater markdowns, totaling $32.2 million, to clear unsold inventory; higher marketing costs of $21 million to relaunch the brand, and an investment of $18.2 million to launch 22 new concept stores. Vandevelde's elevation and actions reinforced the belief of analysts and competitors that Marks & Spencer won't be satisfied with gradual evolution.

"After six months, it's clear that in today's challenging trading conditions we need to step up both the pace and quality of implementation," Vandevelde said. "These changes will inject new blood and management skills to strengthen our capability in strategy and execution."

As previously reported, Marks & Spencer has sent mixed signals about its food retail intentions in the U.S. Last year, it announced it would attempt to sell Kings. Then, in May, the company said it would retain the chain and even slowly start to expand it.

Meanwhile, Marks & Spencer continues to operate in Japan and recently signed an arrangement with Diego Della Valle to open stores in Europe beginning in spring 2001. However, it has backed off plans to open a Brooks Brothers flagship store in London.

There had been speculation that Holmes eventually would replace Salsbury as Marks & Spencer's CEO. However, a spokesman for the retailer said Monday that Vandevelde's appointment as CEO is "a permanent one."

"Luc has said he would like to think any member of the executive board could eventually become CEO," the spokesman said. "However, Roger has to prove himself just like anyone else."