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Five years ago, the talk at Chelsea was of deals. One in particular occupied the minds of some of those at the Flower Show's gala night: Marks & Spencer and whether Philip Green was going to make a bid.
Soon afterwards, Stuart Rose, the billionaire retailer's friend, was installed, and Green's ambition was thwarted. The mood at Chelsea last night was very different: we're in the grip of a slump, the bankers were shattered and takeovers were for the garden gnomes. But M&S was still occupying minds.
It was known that M&S's results today would be bad — just how bad, was not. In fact, they're awful, at the bottom of City forecasts. In the first part of his reign, Rose gave M&S's fashion a fresher appeal; he put the chain in the vanguard of the growing quest for better, ethically-sourced food; and the group found renewed zest. Along the way, Rose managed to install himself as executive chairman — a move that did not go down well with the City.
Alas, as the economy turned, M&S has been found wanting. Its inability to adapt quickly to straitened times, to fend off the supermarkets in food and the likes of Primark in clothing, have seen the bloom wilt.
Rose can say we're in the middle of a crisis but M&S's performance is worse than others'. The contrast between his figures and those of Sainsbury's last week, for instance, could not be more marked.
That comparison will be made because there are those in the City who say Rose has had his day, and Justin King of Sainsbury's should return to M&S (King used to run the food division). In truth King's own results — profits of £545 million on sales of nearly £20 billion— suggest a huge push for volume at the expense of margin. Nevertheless, Sainsbury's is moving in the right direction.
Five years ago, M&S's profits were £784 million. Today, they're £604 million. A year after he took charge, Rose warned the City of dismal profits — in the end, they came in at £615 million, some £11 million higher than today.
What's alarming is the sense that not much has fundamentally improved. Rose is talking about a “step change” in customer service. After five years, you might think all the step changes he wanted to make had been made.
There's still a revolving door at the top — latest to go is Carl Leaver, seen as a candidate to succeed Rose and in charge of M&S's overseas expansion. Going international was a major ingredient of the Rose plan but seemingly, it is no longer major enough to detain Leaver.
Rose is right to say we're in a recession. But for M&S's hard-pressed investors, this isn't just a recession, it's an M&S recession. Rose has a lot of answering to do.
