SIR Stuart Rose this week has to convince investors in Marks & Spencer that he has not lost the plot and that he can restore the faltering chain's fortunes. How satisfying it would be if he could announce annual profits back above £1bn.
Rose has been in the firing line since Christmas when he slashed prices only to suffer a mauling from the City when sales disappointed. His promotion to executive chairman embroiled him in a corporate governance dispute which was entirely avoidable.
A clearer indication of who may succeed him would have eased the tension and, should the new and risky decision to introduce branded goods into the food stores prove a hit, then it may point to former Waitrose boss Steve Esom, who has responsibility for the division.
With the shares down 45% over the past year these are clearly the toughest times faced by the board since its near-submission to takeover from Sir Philip Green in 2004. The turnaround was a cause for celebration and Rose was knighted for his efforts.
But a downturn in sales this year, coupled with warnings of further trading difficulties into 2009, are putting pressure on the share price and leaving M&S exposed once again to predators.
Its last recovery was an object lesson in reviving an iconic institution. But the competitive issues remain – online trading and supermarkets engaged in a pincer movement – while new pressures have emerged. The economy has weakened since the last turnaround. Inflation is rising and weakening household budgets will divert some shoppers to cheaper alternatives.
Walsh on wing and a prayer if staff ignoredWILLIE Walsh won plaudits last week for waiving his right to a whopping bonus. Following the fiasco of Heathrow's Terminal Five it was noble of him to accept that the buck stopped at his desk.
But he didn't have much of a choice to make. With his pilots in rebellion, customers avoiding T5 at all costs and investors worrying about the immediate outlook, it would have been a brazen decision to take the £700,000 on the table.
Walsh divides the City from just about everybody else. The big institutions like him because he's cut costs, delivered on profit margins and restored the dividend for the first time in seven years. It will be a hard act for him to follow now that rising fuel costs will erode some of those gains. Shareholders who have seen their investments halved over the past year will need to fasten their seat belts in preparation for a bumpy ride.
At least they know who will be in charge for the next decade, as Walsh himself declared he expected to stay on for another 10 years, though that may also prove scary enough to depress those among his staff who feel they are being made to carry the can for the cutbacks. Resolving the regular round of employee disputes should be among Walsh's top priorities for the year ahead.
Water industry faces stream of problems THE water industry in England and Wales is moving closer to the Scottish model following proposals from Ofwat, the regulator south of the border. But before anybody jumps headlong into this they should look at what is happening, or not yet happening, in Scotland.
The industry here was deregulated on April 1, with four companies vying for business customers against the incumbent Scottish Water, whose business trading division is Business Stream. Thus far there has been virtually no movement, if indeed there has been any at all, due to limited cost benefits in switching – so Business Stream retains its monopoly.
Osprey and Ondeo are awaiting licences. Satec, trading as Water Choice, claims it is talking to potential customers but won't say how many. The operations of another, Aquavitae, a Berkshire-based company with an office in Glasgow, are unclear as no one from the company was prepared to comment. I was told to expect a call from somebody called "Dave", but I heard nothing. Let's hope his potential customers fare a little better.
Energy consultancy McKinnon and Clarke has accused the Water Industry Commission for Scotland (WICS) of not doing enough to promote competition. On the basis of my experiences, WICS also has to do more to monitor what is going on. It could not confirm the trading status of Aquavitae, which would seem to me a fundamental role for the regulator.
The full article contains 743 words and appears in Scotland On Sunday newspaper.
