M&S boss 'must revive company fortunes'

Marks & Spencer boss Stuart Rose was today facing up to the task of delivering a trading revival after fending off a proposed £9.1bn (€13.6bn) takeover bid.

Mr Rose is targeting a return to like-for-like sales growth in the next financial year after winning a battle for control of the retailer with tycoon Philip Green.

Central to this is a drive to simplify the business that will see the disposal of financial services arm M&S Money for £762m (€1.1bn) and drastic cuts in food waste.

Under the banner of “less is more”, Mr Rose vowed on Monday to reduce the number of clothing lines on offer and revamp stores to make them less cluttered.

Confidence in this strategy was reflected in the share price which traded at 346p (€5.20) today – well above the 280p (€4.20) prior to the statement from Mr Green that he was preparing a bid.

Analysts said takeover rules barring Mr Green from bidding for another six months gave the M&S chief executive time to lay the platform for a turnaround.

However, Bhs and Arcadia owner Mr Green has warned his group will now do battle in a high street “judgment day” with M&S.

He said: “The big winners are going to be the customers. What I am fired up about is making sure our own businesses – Bhs, Top Shop, Dorothy Perkins – trade their socks off.”

According to Seymour Pierce analyst Richard Ratner, the threat of an imminent price war should be taken seriously.

He said: “He’s already got the merchandise lined up whereas M&S isn’t yet in a position to respond. If Mr Rose doesn’t begin delivering within a year then Mr Green could be back.”

The billionaire’s decision to pull out came after he concluded that his bid vehicle Revival would not gain the cooperation of the M&S board.

Mr Green, who put up £1.6bn (€2.4bn) of his own money for the approach, had claimed the support of more than 30% of shareholders for his campaign to get M&S to open up its books.

But chairman Paul Myners told shareholders yesterday that it would be wrong to allow Mr Green to carry out due diligence when M&S still believed his £9.1bn (€13.6bn) proposal undervalued the company.

That stance appeared to have the support of individual shareholders, who came out in support of the company at its annual general meeting in London yesterday.

City stockbrokers Dresdner Kleinwort Wasserstein said Mr Green had served M&S shareholders well by making an approach.

“M&S has replaced an ineffective chief executive, done a good deal in selling M&S Money, geared up the balance sheet and received a huge wake-up call,” it said.

Mr Green announced he was considering a takeover offer for M&S on May 27, although his chances were hit four days later with the surprise appointment of former Arcadia boss Mr Rose as the new chief executive of M&S.

On June 3 Mr Green made his first takeover approach, offering £7bn (€10.5bn) in cash and a 25% stake in bid vehicle Revival.

Two weeks later, a second possible offer of 370p (€5.50) per share was rejected before his final offer of 400p (€6) a share was again knocked back by M&S, which it said continued to undervalue the company.