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Shares dive after M&S Christmas sales slump
Simon English, Evening Standard9 Jan 2008
Marks & Spencer's shares plummeted today as Sir Stuart Rose revealed his first serious stumble as chief executive of the chain.
A dire set of Christmas trading figures set City tongues wagging that he could be forced to name a successor later this year.
The shares sank 83½p to 420p, a fall of almost 17% and not far off the 400p at which billionaire Topshop retailer Sir Philip Green proposed a takeover bid a few years ago.
Newly-knighted Sir Stuart is widely credited with saving M&S from doom since his arrival in 2004.
But after a sluggish Christmas trading session, questions are being asked, perhaps for the first time, about how long he intends to stay in place.
In the 13 weeks to the end of December, M&S's like-for-like sales in the UK slipped 2.2% - a performance that compares unfavourably with results at Waitrose and John Lewis. Waitrose like-for-likes were up 4.1% over the period and M&S is also coping with competition from a resurgent Morrisons.
Sir Stuart regards questions about his future as unfair, given he does not complete his fourth year in the job until May. He always said he would do five years before considering his position.
"It's a bit early to be writing me off. It will be a fair question to ask when I am into the fifth year," he said, while conceding that "the board is acutely aware of the issue, the chairman is aware of the issue".
Although the 58-year-old remains one of the most admired retailers in Britain, there is a sense among City analysts - so far largely unspoken - that his work may be done and that he should move towards identifying a successor to protect his legacy.
M&S claims it is one of the few retailers that did not discount in the run-up to Christmas, protecting the integrity of the brand. Sir Stuart said: "The sales numbers are the sales numbers - we had a very challenging period. But, to put it into context, we maintained market share and were up against tough comparatives. There will be a little bit of a pause, but we are trying to build for the future. We will take a breath and keep doing the things we are doing."
Sales across the group rose 2.8%, thanks to a 15.1% jump in international sales.
Its management team is now seen as much stronger, thanks to Sir Stuart's recruits. Possible successors include Kate Bostock, director of womenswear, and Guy Farrant, director of retail.
M&S was hoping to break the £1 billion annual profits barrier, but this is now dependent on the strength of the fourth quarter. Of economic conditions, Sir Stuart said: "We are the bellwether. We sell 10% of all clothing sold in the UK. Take it from us, it is slowing down."
Asked if he would like to see an interest rate cut this week, he replied: "You don't have to be a genius to work that out."
