Rose tells M&S clothing suppliers to slash prices

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The Independent Online

Stuart Rose, Marks & Spencer's new chief executive, is putting pressure on the retailer's clothing suppliers to slash their prices as he seeks to shake up the group's supply chain. Industry sources said Mr Rose had asked some of M&S's top clothing suppliers to lower the prices they charge by 5 to 7 per cent.

Stuart Rose, Marks & Spencer's new chief executive, is putting pressure on the retailer's clothing suppliers to slash their prices as he seeks to shake up the group's supply chain. Industry sources said Mr Rose had asked some of M&S's top clothing suppliers to lower the prices they charge by 5 to 7 per cent.

M&S has one of the most complex supply chains of any British retailer. While most retailers buy their clothing direct from factories in Eastern Europe and the Far East, M&S deals with a welter of middlemen that all take a cut out of its profit margins. Analysts estimate the group overpays by as much as 10 per cent, depending on the range, compared with other UK retailers. All the items it buys pass first through one of about 90 supplier distribution centres in the UK and then through one of its 10 company-owned distribution centres, before finally ending up in one of its 300-plus clothing stores.

M&S declined to comment on the detail of Mr Rose's plans before his strategic update next month, although a spokeswoman said: "Stuart has seen suppliers since he started."

The complexity of M&S's supply chain ties up millions of pounds of working capital. Its garments take 18 weeks to arrive on the shop floor - against six weeks at retailers such as Zara and Hennes & Mauritz. Even the old management team had begun to tackle the problem. It intended to close the vast majority of its 90 UK distribution centres if a pilot scheme to cut out one layer of the supply chain was successful. Mr Rose, however, is expected to accelerate the old team's plans.

Separately, it emerged yesterday that the Association of British Insurers has written to HBOS - one of five banks that is lending Philip Green almost £11bn to fund his planned takeover of M&S - expressing concern at the involvement of the bank's chairman in Mr Green's proposed bid. Lord Stevenson of Coddenham has agreed to be the senior independent director in Mr Green's bid vehicle, Revival Acquisitions. "We wanted the board of HBOS to be aware there was a potential conflict of interest in Lord Stevenson taking up a position on Revival's board. If the interests of Revival and HBOS diverge there may be a conflict," an ABI spokeswoman said.

The ABI's letter, which was sent to Sir Ronald Garrick, the deputy chairman of HBOS and its senior independent director, was intended to ensure the bank had its "eyes wide open", the spokeswoman added.

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