Comeback eludes retail icon M&S

Analysis Guy Robarts BBC News business reporter

Media reports say sales have fallen sharply in recent weeks but M&S has kept quiet on its current trading status.

Sagging retail sales on the High Street have hit M&S particularly hard

"We think it's running around 9% down for the first few weeks of this financial year," says Richard Ratner, analyst at Seymour Pierce.

M&S has blamed poor weather and consumer caution for its current problems, but the High Street icon seems to have been battling stormy weather for a long time.

Chief executive Stuart Rose says the former High Street icon remains "on track" to recovery, but the poor sales are sure to raise questions about that.

It endured a turbulent year in 2004. First came the departure of both its chairman, Luc Vandevelde, and chief executive Roger Holmes.

Mr Vandevelde seemed to have turned M&S round, overseeing three consecutive years of profit growth, though doubters remained.

Then, entrepreneur Philip Green of Arcadia group fought - and failed - to secure the backing of M&S shareholders for a �9.1bn takeover of the 121-year old company.

But now many investors may be wondering whether their vote to reject his advances was a good idea after all.

Sagging confidence

One year on, the profits recovery promised last summer by M&S has failed to materialise despite attempts to make it more efficient through revamped stores, better deals from suppliers and improved clothing ranges.

The wardrobe basics were missing Ceril Campbell, image consultant

Clothing sales have dropped and M&S has lost half a percentage point from its all-important clothing market share, to 10.5%.

Attempts to lure shoppers back to its stores have been blighted by falling High Street sales as shoppers tighten their belts to pay off credit card debt after recent interest rate rises.

Rival clothing retailers such as Next and New Look have reported sagging consumer confidence on the High Street. And reports have suggested the decline in clothing sales could be speeding up.

So, it's tough for everybody on the High Street, but M&S may also be to blame for its downfall.

"Most of the multiples have done badly, but no where near as badly as M&S," says Mr Ratner.

'No subtlety'

Womenswear is the cornerstone of M&S's fortunes and here, critics say, the retailer has been in danger of alienating its traditional customers.

Pressure grows for Stuart Rose to deliver a winning strategy

Celebrity stylist and image consultant Ceri Campbell believes M&S is not catering for women's needs in the way it used to.

"Women in their 50s were keen to spend, but they couldn't find the staples that they knew M&S for of old. They couldn't find a good pair of trousers cut well," Ms Campbell told BBC Radio 4 shortly before M&S published its profits.

In her view, "the wardrobe basics were missing" from its clothes for younger women.

"There were man-made fabrics, a sea of lilac and very clear pastels that women don't want," she said.

'Under control'

In response to such suggestions that M&S is losing its touch, Mr Rose said "you can't please all the people all of the time". He told BBC Radio 4's Today Programme that he remained confident about the retailer's future.

I believe we've got the foundations in place to drive the business forward Stuart Rose, chief executive

Shareholders were relieved that M&S did not issue a new profit warning on Tuesday, as many industry commentators had feared a repeat of January's alert.

Mr Rose assured investors he could steer the group out of harm's way, saying the economic climate was behind M&S's sales decline.

Last week, M&S appointed Terry Burns, chairman of Abbey National, to succeed Paul Myners as M&S chairman.

Meanwhile, menswear sales have held up well, and the market share for childrenswear stabilised for the first time in three years during the final quarter.

This autumn, M&S will test its Simply Food products in eight service station forecourts as it seeks new markets to compensate for sagging High Street sales.

"We've got costs under control. I believe we've got the foundations in place to drive the business forward," Mr Rose said.

But he acknowledged there were problems on the path to recovery.

"I won't pretend it's easy."

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