Page last updated at 22:30 GMT, Tuesday, 9 November 2004

M&S unveils management shake-up

M&S store
M&S said recent trading has been "difficult"

Marks & Spencer has unveiled a major management shake-up at the same time as reporting a fall in profits.

Finance director Alison Reed will step down early next year and three other senior managers will leave the company and not be replaced on the board.

Pre-tax pre-exceptional profits for the six months to 2 October fell to 292.7m ($543m), down from 325m a year ago.

Like-for-like UK sales - which ignore new store openings - fell 4%, and M&S said recent trading had been tough.

Where there are challenges I can see opportunity
Stuart Rose, M&S

"Trading has become more difficult since we last updated on current trading on 12 October. However, we do not believe this trend to be entirely Marks & Spencer specific," the company said.

M&S said it would take an exceptional charge of 81m for the six-month period. This includes 29.3m to cover the cost of closing the unsuccessful Lifestore venture and 39.6m spent on fending off a takeover approach from rival retailer Philip Green in the summer.

Slowing sales

M&S's trading statement came on the same day as a sector-wide study by the British Retail Consortium (BRC) and accountants KPMG showed that October's shop sales grew at their slowest pace this year.

And there looks to be little good news in store for retailers in coming months, with analysts expecting a further "marked" slowdown on the High Street.

M&S SHAKE-UP
M&S chief executive Stuart Rose
OUT:
Alison Reed - finance director
Maurice Helfgott - executive director menswear, childrenswear, home
Mark McKeon - executive director retail, international, franchise
Laurel Powers-Freeling - chief executive of M&S Money
Jean Tomlin - human resources director
Jack Peterson - business unit director for home operations
IN:
Stuart Rose - to take responsibility for retail, merchandise, buying
Charles Wilson - to take on systems, logistics and property responsibilities
A new finance director
"Overall the survey suggests that the recent rebound in retail sales growth has come to an end," Victoria Redwood at Capital Economics said.

At M&S, chief executive Stuart Rose is to take direct responsibility for retailing, merchandising and buying.

Senior managers to go include Maurice Helfgott, executive director of menswear, childrenswear and home, who has been at the company for 16 years.

Mr Rose said the departures were "not a reflection of the talents and qualities" of the individuals involved.

Tighter grip

Mr Rose said M&S needed to talk to its customers directly to get a clearer grasp of what they wanted.

"I don't think we have really had a full understanding of who our customers are, what turns them on and what they want from us," he told BBC News.

"We have been relying too much on hearsay, too much on pure research and not enough on actually talking to them."

In recent months Mr Rose has tightened his grip on the running of the retailer, bringing the Per Una clothing label in store, closing its Lifestore outlets and selling M&S Money to HSBC in an 800m deal.

The clear-out also means an effective end of the old regime at the retailer - of all the executives who were at M&S at the start of the year, not one is left.

The group is currently hunting for a replacement for finance director Alison Reed who has been at the group for 20 years - Mr Rose said she had agreed to stay on until February "to ensure a smooth handover".

By the throat

Mr Rose added that streamlining the board would allow even "faster decision making... more accountability and quicker execution" of ideas at the business, adding that he was "quietly confident" of seeing revenue growth by 2005/06.

"Stuart Rose has completely taken this business by the throat now," said BBC business editor Jeff Randall.

If by next summer ... the share price is still 300p or lower, I think he (Stuart Rose) and the rest of the board will be in trouble
Jeff Randall, BBC business editor

Edward Whitefield at retail strategists Management Horizons said he believed the "green shoots of recovery" at M&S would be visible by next summer.

"Turning around Marks & Spencer is like turning around a big tanker in an ocean, the first steps of the turn must be started miles out from the turning point," he told the BBC.

'Clock is ticking'

Since being brought into the M&S fold over the summer Mr Rose has fended off a hostile 400p-a-share takeover approach from retail entrepreneur Philip Green, battled falling sales, and launched a complex 2.3bn share buyback scheme.

However, many analysts added that if the group's fortunes do not show signs of improvement by 2005/6, Mr Rose may be facing an uncertain future.

"I think the clock is now definitely ticking now for Stuart Rose," Mr Randall added.

While a poor performance over Christmas could be blamed on the old regime at M&S, Mr Rose will be expected to boost business soon, he added.

"If by next summer ... the share price is still 300p or lower, I think he and the rest of the board will be in trouble."

M&S shares closed 0.8% lower at 350p as analysts scaled back forecasts for full-year profits.

In January, profit forecasts for the year to March had been as high as 855m, but estimates have now been reduced to between 660m and 685m.

video and audio news
Why Marks and Spencer's profits have fallen




SEE ALSO
M&S starts share buyback scheme
25 Oct 04 |  Business
M&S share buyback wins approval
22 Oct 04 |  Business
M&S says sales fall now slowing
12 Oct 04 |  Business
The Battle for Marks and Spencer
05 Oct 04 |  Business
M&S completes Per Una purchase
05 Oct 04 |  Business

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