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New M&S boss expanding own brand strategy

The new chief executive of Marks & Spencer today unveiled an "Only at M&S" campaign to bolster the company's own brand as part of his long-awaited vision for the business.

Marc Bolland, who joined M&S from supermarket Morrisons six months ago, said this would involve increasing the M&S brand in clothing, scaling back the number of non-M&S food lines from 400 to 100 and revamping the store's website.

Unveiling his three-year plan for the household name, Mr Bolland, 51, said the company would invest up to £900 million on improving the business, up from an earmarked £550 million. This will include £600 million investment in the UK.

The Dutchman's strategic review came as M&S, which employs 75,000 staff in nearly 1,000 UK and international stores, reported a 17% rise in half-year profits to £348.6 million for the 26 weeks to October 2.

Introducing his plan, Mr Bolland said: "The business is in good shape and we have strong foundations on which to build through evolution not revolution."

He added: "This is a good business, with good results. I'm building on the strengths of the company. We're taking logical steps, we don't want to be radical."

Mr Bolland arrived in May with a formidable reputation, having turned Morrisons into a stronger competitor to Tesco, Sainsbury's and Asda, with growth that bettered its bigger rivals.

The City has been greatly anticipating this first strategic outline from the chief executive, just ahead of the key Christmas trading period.

Mr Bolland said the company's first priority for the 2010 to 2013 plan would be the core UK business.

In clothing, as well as boosting the chain's own brand, Mr Bolland will look to invest in its sub-brands - such as womenswear ranges Per Una and Indigo Collection - through improved marketing and clearer positioning in stores.

Two years ago, M&S broke with 85 years of tradition by selling some of Britain's best-loved food brands - such as Heinz Baked Beans, PG Tips and Kellogg's Cornflakes - in its stores alongside its own label foods.

But Mr Bolland said branded foods will only play a role where M&S cannot develop its own, better alternative.

While reducing the number of non-M&S lines, the company will increase the total range from 7,000 to 8,000 lines, after reorganising food hall space.

Mr Bolland said £150 million will go into the group's online business, with a goal to double revenue by 2013-14.

The chief executive said the company would end its website collaboration with Amazon and build and manage its own new platform for http://www.marksandspencers.com.

With retail space, M&S aims for 95% of the population to be within 30 minutes drive of a full-line store by 2015. The number of Simply Food stores is set to increase as well.

Mr Bolland said he wanted to boost international sales to between £800 million and £1 billion, but stopped short of earmarking the opening of any new stores in continental Europe. He said India, and Shanghai, in China, were two priority international markets.

Neil Saunders, consulting director at retail analyst Verdict, said Mr Bolland had to demonstrate how he would build on the stable foundations laid by Sir Stuart Rose, his predecessor.

Mr Saunders said: "Today's update gave us a first glimpse of his architectural blueprint, and the plans look extremely sound.

"While they do not represent a radical departure for the company, they show a very sound grasp of the fundamental issues M&S needs to address across all categories and lay out a clear sense of direction for the business."

Keith Bowman, an equity analyst at Hargreaves Lansdown Stockbrokers, said the new strategy comes with risks.

He said: "The M&S brand has relied on an ageing customer base for some time now, with Mr Bolland hoping that he can excite younger fashion-orientated consumers.

"A move away from big branded food products could diminish the potential to increase the company as the destination for the 'big weekly shop', while a slow pace of international growth might leave the door open for others in the meantime to build market share."

In the half-year results, M&S said total sales were up 5.4% to £4.6 billion, while like-for-like sales rose 4.4% in the UK.

General merchandise sales were up 6.3% on a same-store basis, driven by strong sales in clothing as celebrity-packed TV adverts featuring model Twiggy, X-Factor judge Dannii Minogue and retired footballer Jamie Redknapp brought an extra 1.8 million customers into its stores.

In food, like-for-like sales were up 2.6%, with promotions such as the Dine-In for £10 range proving popular.

Website sales were up 49% in the first half of the year, while international sales, which account for 10.1% of total group revenues, were up 3.8% in the period.