On the day that the BRC revealed weak sector data for October, Rose was on bullish form as he posted M&S interims. Although there has been a slowdown at the iconic business in the second quarter, M&S had plenty to be upbeat about.
Profits exceeded expectations; Rose is so confident about continued growth prospects in the core domestic market that he is stepping up spending on new space; internationally, M&S will debut in China and bump up operations in India; and the multichannel business is well on its way to meeting its sales target of£500 million.
On the City front, there was also good news. The retailer is embarking on a£1 billion share buy-back and increased its interim dividend by 31.7 per cent.
Rose expressed the obligatory caution about the outlook for Christmas and the rest of the year – hardly surprising given a volatile year to date, whether it’s been weird weather, interest rate rises or consumer shocks such as Northern Rock.
The share price rise that greeted M&S’s numbers showed that investors continue to find Rose’s story compelling. He has delivered on his promises so far and there’s no reason to lose faith now.
Rose couldn’t resist a poke at criticisms made earlier in his reign. He recalled how some had questioned the value of the store modernisation programme and pointed out that now – from Next to Debenhams to Bhs – revamps have become de rigeur. He said that example should be borne in mind as some questioned the wisdom of international expansion.
The sceptics might argue M&S had to make a humiliating retreat from overseas markets just a few years ago. But, as Rose said, if you have a car crash it doesn’t mean you should never drive again. A changed business culture, changed markets, new people and different ways of doing things all make internationalisation an invigorating prospect. The advent of e-tailing brings the opportunity to push into certain markets, such as the US, without the need to open shops.
Rose gave little away about how long he will stay at M&S. It was noticeable that in the Q&A he frequently referred questions to his lieutenants.
Investors know they’ve got Rose until at least 2009. But then? The message seemed to be that the business is bigger than him and that the business is still going places.
George MacDonald is deputy editor of Retail Week
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