Is Sir Stuart Rose fair to blame the majority of Marks & Spencer’s woes on market conditions?
The once-unflappable knight yesterday apportioned the largest share of culpability for M&S’s shock profit warning to deteriorating consumer spend.
While there is no doubt that retailers are facing some of the toughest trading conditions of recent years as disposable incomes are squeezed, M&S has been giving out signals recently that it has been letting things slide.
“We may have done badly, but everyone else must be doing badly too,” said Rose, probably to the chagrin of some of its listed retail counterparts.
About£4 billion was wiped off the value of retail stocks after M&S announced a 5.3 per cent like-for-like slump over the three months to June 28.
However, a select few may have been quietly pleased that forecasts were downgraded before they were forced to deliver some bad news of their own.
M&S is by no means the only one suffering. Its statement does reflect, in part at least, a sector-wide issue. However, Rose conceded yesterday that almost 40 per cent of the problems affecting its food business were self inflicted and acted quickly to dead-head food boss Steve Esom.
More worrying in the long term though is the clothing arm. Rose said 25 per cent of the troubles affecting M&S’s fashion arm – part of its general merchandise division, which was stung by a 6.5 per cent like-for-like fall – were also self inflicted. Surely, this is 25 per cent too much?
A man who has bragged of his experience through previous downturns should be acting swiftly to resolve it.
It is good news that Rose will review M&S’s marketing strategy. While the ads featuring Twiggy et al deliver on screen, they have failed to materialise into sales in stores, often because the featured products cannot be found.
In theory, M&S’s fashion is on-trend and attractively priced and should continue to hold its own in a tough clothing market if management are completely focused on the job in hand.
And, yesterday’s news – ahead of M&S’s AGM next week – has also acted to take that focus away as the City questions Rose’s credibility and his future at the retailer.
There is speculation that his tenure at Middle England’s retail darling may be short lived, especially if there is another profit warning this year.
Pali International analyst Nick Bubb said there was a 40 per cent probability that Rose will, in due course, be expected to step down or resign.
Rose said yesterday: “Mark my words, there will be more grim news from the high street.” His comment might come true in a way he didn’t mean.