Evidence of that is likely next week, when M&S posts its prelims. The City consensus is that profits will come in at about£990 million, but it’s just possible they’ll be a smidgeon over the billion.
M&S is the only retailer other than Tesco ever to have notched up profits on that scale, but hasn’t managed it in a decade. To pass such a milestone would normally be cause for festivities but, if it happens again, it may well be seen as a high water mark rather than evidence of a still-rising tide.
Since the City scribblers started pencilling in£1 billion profits, the sector has been knocked for six by a swift and severe downturn and M&S boss Sir Stuart Rose expects it to last right into next year. The analysts have been bringing back forecasts and some fear profits next year will be at the same lower levels as some years back.
Rose has signalled that he will leave in 2011. Until then, as executive chairman if not chief executive, it looks likely that he will need to perform a second turnaround to leave on the high that he’d clearly love.
It’s the City’s duty to crystal ball-gaze and take a cloudy looking future into account in its recommendations and valuations. But even if forecasts come down, should M&S pass the billion next week there should surely be a moment of celebration before the hard questions are asked and the red pencils sharpened.
Going hell for Leather
As if Land of Leather’s desperate trading wasn’t enough to depress investors, the retailer and its boss, Paul Briant, have landed themselves fines totalling£224,000.
The punishment, levied by the FSA for breaching regulations on the sale of payment protection insurance, sent the retailer’s depressed shares down 9 per cent on Monday.
The company and Briant might feel a bit hard done by, since the FSA acknowledged both had acted to address identified problems. But the regulator clearly wanted to take a high-profile scalp to remind others of their responsibilities.
The upshot is that Land of Leather is likely to be shunned by many investors until a clear recovery is on the horizon. In these tough times, shareholders want to see self-help not self-harm.
George MacDonald is deputy editor of Retail Week