Under-fire M&S boss faces shareholders

Marks & Spencer chief executive Stuart Rose faces the prospect of a humiliating shareholder rebellion at the firm’s annual meeting today.

Rose – forced into a shock profits warning last week as shoppers turned their back on M&S – is under fire over his controversial role as executive chairman.

The combination of the chief executive and chairman jobs is against corporate best practice and has been opposed by several of the group’s bigger investors.

Reports suggest up to a third could fail to support Rose’s re-election to the post, dealing a severe blow to the authority of the man credited with the turnaround of the high street bell-wether since joining in 2004.

Rose has pledged to remain with the retailer until 2011 but could even face calls to resign.

Shareholders attending the meeting at London’s Royal Festival Hall are also likely to pose tough questions to Sir Stuart over the tumbling M&S share price as trading conditions worsen.

A £1bn(€1.25bn)-plus revamp of its stores has failed to bring in the shoppers, while head of food Steven Esom also left the company last week after little more than a year after the food business was hit by hard-pressed shoppers trading down from M&S’s premium-end goods.

Last week’s grim update, which came a week earlier than expected, showed an overall 5.3% fall in UK like-for-like sales in the 13 weeks to June 28 – the worst quarter for the company since April to June 2005.

This sent shares tumbling by a third, wiping almost £1.7bn (€2.1bn) off the company’s stock market value. The stock rallied yesterday amid speculation in the City about possible takeover interest.

M&S produced profits of more than £1bn (€1.25bn) in the year to March but analysts have rushed to lower their forecasts following the warning.

Panmure Gordon analyst Philip Dorgan predicts profits will fall to £626m (€785m) this year, adding: “It is going to be a tough job to regain market confidence, let alone turn the food business around.”

In May, M&S announced initiatives including pilots to sell branded food favourites such as Marmite and Heinz baked beans for the first time, which began in 19 stores in the North-East this week.

However Rose wants to up the pace of change in the business and warned last week that the high street slowdown was going to be “longer and more hard-fought than first anticipated”.

The executive chairman – who collected his knighthood in May – saw his pay package shrink by nearly £1m (€1.25m) last year after the firm failed to hit annual performance targets, despite reaching the £1bn (€1.25bn) profits mark.

The company has 643 stores in the UK, including 144 franchises. It has 75,000 staff in total, of which 72,000 are UK-based.