Stuart Machin has Waitrose firmly in his sights. Like most well-rehearsed and closely shepherded 21st century corporate leaders, the chief executive of Marks & Spencer avoids discussing the competition as much as possible.
Yet with his arch-rival only a whisker ahead in the latest market share rankings and the crown of grocer to Middle England within reach, the temptation is too great.
“You could argue we should have overtaken them already,” Machin smiles. “I might even be arguing that internally here.”
This is the “positive dissatisfaction” which Machin has made M&S doctrine since he was promoted to chief executive two years ago. No matter how well he’s doing, he’s sure he could be doing better. That goes for everyone else, too.
“I’m healthily paranoid every day about something not getting done,” he says. “I’ve got this restlessness, but I don’t think it’s a negative restlessness. I don’t feel daunted by it. I feel energised by it.”
In fairness, it has been a long time since 140-year-old M&S appeared so full of beans.
From the turn of the century the institution endured seemingly inexorable decline, endless modernisation efforts and repeated false dawns.
It narrowly avoided catastrophe in 2004 by fighting off a hostile takeover bid from Sir Philip Green. In 2019 it was relegated from the FTSE 100 for the first time since the index of blue-chip companies was founded decades earlier.
The turnaround has been sharp. Since Machin, 53, was appointed by chairman Archie Norman the share price has more than doubled, M&S has been restored to the FTSE 100 and won back investors in the City of London who had grown weary of its broken promises.
M&S’s latest annual financial results, published 10 days ago, underscored the transformation. Critically, sales were up across both the food and clothing arms, and in most categories within them.
Profits leapt 41pc to £673m, beating City forecasts and fuelling hopes that M&S will soon hit the £1bn mark for the first time in 15 years.
The retailer finished the year with the equivalent of £46m cash on hand, compared with a net debt of £356m a year ago. That allowed it to declare it was in its best financial health since 1997. Rachel Reeves cannot hope to inherit a national balance as robust as that passed on to Gordon Brown, but at least M&S will be able to pay its bills.
The booming profits are celebrated for staff on the big screens in the lobby at the head office next to Paddington Station. Machin, who is keenly aware of M&S’s recent past, doesn’t seem too keen on the chest-thumping display.
“I think in the past we have fallen into the trap,” he says. “That’s why I do get a bit anxious. We’re on track. But it doesn’t mean we’re done. It doesn’t mean everything is great.”
For Machin, absolutely everything should be great. He is, in business parlance, into the detail, and at the moment appears to draw more job satisfaction from a fresh breakthrough in the store’s breakfast offering than from last year’s profit number.
“Our director of product development has just brought me up what she’s calling the ‘Stuart breakfast smoothie’. It’s taken us a bit longer to get it right, but bless her she’s worked hard and she’s got the right cinnamon levels now. The dates are right. The texture’s right.
“That doesn’t mean I sign-off every single product, but I like to have a view.”
He detects raised eyebrows. “Look, I’m obsessed with everything we sell.”
Later this year the same approach will deliver an overhauled pizza range after a year of development (“I didn’t think our pizzas were good enough. They were good versus everyone else, but how do you get the best pizza in the country?”). The premium “Gastropub” ready meal line will be relaunched with fanfare for its 20th anniversary in September, too.
Machin’s obsessions drive him to wake up at 4.30am for two hours of reading the news and internal reports before starting calls. Machin spends weekends visiting stores and dresses head to toe in M&S, after his menswear team finally delivered a pair of smart trainers that won his approval.
Shopping has been Machin’s life. He started in the industry aged 16 pushing trolleys around his local SavaCentre in Kent. The small chain of hypermarkets was a joint venture between Sainsbury’s and BHS.
He stuck with Sainsbury’s for 16 years, rising to oversee 180 stores in the South. Next came shorter stints at Tesco and Asda, until in 2008 Machin emigrated to Australia to spend eight years climbing the ranks at the retail group Wesfarmers.
It was in Australia that his eye for detail won the trust of Archie Norman, a longstanding consultant to Wesfarmers. Norman, now 70, a turnaround specialist with his own reputation for close control of businesses (investment bankers at Lazard UK, where he was chairman, joke of his emails criticising the topiary at its Mayfair offices), groomed Machin for M&S.
“I couldn’t have a better chair because there’s trust,” he says. “There’s brutal honesty. And of course we both like the detail.”
In previous roles, such as chairman of ITV, Norman has clashed with management teams who saw him as overstepping his non-executive role. It seems, however, the progress at M&S and his discovery of a kindred spirit in Machin has allowed him to step back more.
“His role has changed a bit, I think he would say that,” says Machin. “Because he is definitely more of a chairman now. But we definitely look at it as one team. We have a catch-up every week where I have to be honest and share everything. What I love is just the straight talk. It’s very useful.”
M&S last year regained its status as UK market leader in womenswear after four years off the top spot, overtaking Next.
Most gratifying, and noticed with admiration by high street peers, is the way it has been able to tempt back younger shoppers both with desirable fashions and the readily available, quality basics on which its empire was built. Women under 30 accounted for a third of underwear sales last year, double the proportion of 2022.
Machin says better is to come this summer and on the long run into Christmas.
“Our prices will remain flat year on year. That’s what we’re trying to hold to. But the style and the quality of the product, I think has stepped up this year, significantly.”
Machin is aiming to boost customer service in the areas that count, with a multimillion-pound investment in specialist bra fitters and suit fitters.
“Where I really want to get to in the next 12 to 18 months is a bit more service, a bit more selling and serving,” he says.
“It’s someone to talk to and someone to help you with your suits. It’s easy for me because I know every product and I know my exact size. I know where I’m walking, what I want and I’m done.
“But actually when we have people helping customers with their suits our sales triple. So I think there’s a lot for us to do on that.”
The work is underway in time for M&S’s regular tournament tailoring collaboration with the England football team at Euro 2024 in Germany.
Such window dressing comes on top of much more fundamental change underneath that has been crucial to the clothing revival. M&S has reduced the number of suppliers it uses, and simplified its own distribution network to help reduce stock shortages that infuriate even the most loyal customers. A new merchandising system is on its way to underpin the change.
When he was in direct charge of the food business, Machin began another radical replumbing by buying its biggest logistics provider, Gist, for an initial fee of £145m, and taking control of its supply chain for the first time. He also launched a new forecasting and ordering system.
“I did the easy bit,” he laughs. “I just did the deals to get it in. Now the team has got to make it work. Honestly, we’re just getting started on that.
“In five years, when we’ve sorted out our networks, our supply chain, better ordering systems, better availability, less waste, less working capital, it will be quite exciting for us.”
Technology and the shift to online shopping has been a frequent stumbling block for M&S over the years. Last year Machin put a stop to a host of projects to focus efforts again on replumbing the business so that it has the foundations to build on, such as the right data on its customers.
Last year online sales accounted for 32pc of the clothing and home business, and M&S has set a “long-term” target of 50pc. Meanwhile Machin’s team is working on restructuring key pillars such as its Sparks loyalty scheme.
“It’s not because we’ve been doing wrong things necessarily, but it’s been quite slow,” he admits. “We think there’s a bigger growth opportunity online than we’ve got at the moment.
“We want customers to shop in a more digital way, we want the app to be easier. We want it to be more interactive. I stand in stores on a Saturday looking at customers shopping, in women’s wear, in denim, and not sure what to buy. People need help. Our size guide isn’t good enough.
“If you’re on Sparks, we might say, well, it’s your birthday, have £20 off your next suit, because we know you’d like suits. We can do that at the moment but not for everyone and it’s very hard. We don’t have all the datasets.”
One thing Sparks will not become, Machin insists, is the only way to get the best prices in M&S supermarkets, as has become common practice in the cost of living crisis among its rivals. “That’s what I call tricksy pricing,” he says.
Another online pillar in need of attention is the joint venture with Ocado which supported M&S’s late entry into online food retail. Tim Steiner, Ocado’s boss, has said M&S is wrongly withholding performance payments and has threatened legal action. Machin says the joint venture has underperformed, delivering a £37m loss to M&S, and nothing is due.
“We take all the advice we need to take, and I’m pretty clear, we’re all pretty clear that the number was not achieved and therefore payments are not required.
“We do have a responsibility to have good faith discussions. And we are having those.”
The City sceptics about M&S’s transformation (who it must be said are an increasingly rare breed) whisper that Machin may be a mere lucky general. He arrived at a time when major rivals to both its main businesses – John Lewis, Waitrose, Debenhams, House of Fraser – were in financial distress or had completely disappeared from the high street.
Machin won’t disagree.
“There is no doubt that however many headwinds we’ve had, we’ve had some tailwinds. What I will say to the team is, if you weren’t good, you can’t maximise that opportunity.
“If there is a competitor that isn’t as strong for a moment in time, of course, we’re going to go very hard and try to win share for M&S.”
A significant chunk of M&S’s market share gains in the grocery business have been driven by new store openings and the conversion of clothing space in existing stores. In 2022 Machin announced the number of “full line” (i.e. food and clothing) stores will be cut from 247 to 180 by 2028. More than 100 new “Simply Food” openings are underway in parallel.
While sometimes controversial, the moving to more modern premises can have a powerful effect for a retailer that remains two-fifths based in pre-Second World War property.
Last year M&S moved its Liverpool city centre shop to a modern building, reducing clothing space by 39pc and food space by 18pc. Customer numbers nevertheless increased by a quarter and on average each bought more.
“It’s about the quality of the location and the quality of the building,” says Machin. “It’s not about coming out of high streets. Our problem is that a lot of our old stores are really aged. To spend the money we’d need to to modernise them, we’d never get a payback.”
Instead, Machin is now attempting to accelerate the shift to new premises. At the moment he’s on track to complete only 26pc of the estate by the end of this year.
“I’ve said we need to be quicker. We don’t want to make mistakes. But can you imagine when we’ve done half the estate? Or when we get to my target of 180 absolutely flagship full-line stores and 400-plus food stores in the right format? That growth would be quite encouraging.”
London’s Oxford Street has become ground zero for Machin’s property frustrations. There, former Housing Secretary Michael Gove blocked his attempts to knock down and rebuild the 1929 art deco store in Marble Arch. In March the High Court overturned his decision, and now the next move belongs to the next government.
“We need the whole thing ripped out,” says Machin, who has become increasingly outspoken over the row, which he views as a symbol of Oxford Street’s decline as a shopping destination.
“I would hope whoever is in government, whether it’s Conservative, Labour or anyone else that they listen, I would hope any government is pro-business, pro-growth. I did say that being a business leader under that government was like running up a downhill escalator with a rucksack on your back and I stand by it.”
It sounds like the Conservatives might not have his vote? “I’m not going to tell you who I’m voting for,” he laughs. Worth a try.
Taking on Whitehall so publicly is very much in character for the new M&S, which has little of its old deference to hierarchy and an intensity that seems to flow directly from Machin into the business. Colleagues joke that his full surname is Machine.
“I’m a bit of a rebel on hierarchy. We don’t really like it. We just want to do what’s right for M&S and I don’t like layers of approvals. I don’t mind whoever goes and talks to the board. Mary on the checkout has just as much say as I do and everyone can voice an opinion.”
He insists he does enjoy a work/life balance, but says his upbringing by a mother with a successful career in property instilled the overarching “paranoia” he often references.
“I do have a sense that I have to work a bit harder than anyone else. I do think that you reap what you sow. If you’re well paid and you’ve accepted responsibility then you should put more into it.”
He seems sensitive to the risk that some colleagues might find his style too much. Is there a potential perception of control freakery?
Eyes narrow. Lips purse. “I don’t know what you mean.” Then a smile. “I think we all like to be in control.”
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