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Friday, 11 August, 2000, 16:18 GMT 17:18 UK
M&S shares: 10-year low
Food with the St Michael's Promise
Will the new look M&S live up to its promise?
Marks and Spencer appears to have failed to convince investors that it is on the road to recovery.

The former queen of the UK High Street has suffered a sharp decline in the past two years.

Its profits have halved in two years - from more than 1bn to just more than 500m.

The share price fall has been even more dramatic - from more than 650p at the end of 1997 to 209p now.

The shares plunged more than 5% on Friday alone as the retail sector was pummelled on both sides of the Atlantic.

That fall has been despite scores of consultants being brought in to try and diagnose what has gone wrong, and what needs to be done.

A variety of initiatives and personnel changes - including a new executive chairman from Belgium - have been tried as it seeks to halt its profits decline.

Boardroom, Gap

But they have failed to halt the slide - as M&S's share price plunged on Friday to 209p, its lowest levels since 1990.

The catalyst for the latest share price fall was two-fold.

The first was heightened press speculation regarding yet more boardroom changes being planned.

It has been widely reported that chief executive Peter Salsbury is planning to quit, after a management consultancy was drafted in to seek a board level replacement.

The second was a profit warning from US clothing retailer Gap - ironically one of the firms the UK's band of retail analysts said had been stealing M&S customers.

The impact of the two bits of news outweighed some of the positive reviews being received for M&S's new look, brighter stores.

Retail squeeze

That new look is being rolled out bit-by-bit across the UK, but all 297 stores will get a brighter look by the autumn with new staff uniforms and the trademark green carrier bags being scrapped.

A whole raft of UK retailers have seen their profits tumble in the past two years, with Marks & Spencer joining the likes of Top Shop owner Arcadia, C&A and Moss Bros as the biggest name casualties.

Retail analysts believe this is the result of the clothing middle market being squeezed by discounters and top end fashion retailers.

But there have also been consistent reports from the British Retail Consortium to the effect that the clothing sector as a whole has had to slash prices in the past two years to draw customers in.

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See also:

12 Mar 00 | Business
M&S drops St Michael
11 Jan 00 | Business
M&S: A brand new challenge
24 Jan 00 | Business
M&S goes for Belgian boss
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