Private Investor: Singin' the Baker Street blues for that ol' retail monolith
Saturday 12 June 2004
Windin' your way down on Baker Street
Windin' your way down on Baker Street
Light in your head and dead on your feet
Well another crazy day
You'll drink the night away
And forget about everything
There are some songs sometimes that, like a wasp stuck in a jam jar, you just can't get out of your head. Watching the comings and goings at Marks & Spencer's Baker Street headquarters I'm afraid that that great old standard by Gerry Rafferty keeps going round and round in my head. So I looked up the lyrics in the hope of finding a cheap line or two and, happily, as you see I am now in a position to quote these for the benefit and entertainment of M&S stakeholders everywhere. All together now:
You used to think that it was so easy
You used to say that it was so easy
But you're tryin'
You're tryin' now
Another year and then you'll be happy
Just one more year and then you'll be happy
But you're cryin'
You're cryin' now
I imagine that Vittorio Radice, the latest casualty of the upheaval wrought by Philip Green's bid, may well be crying into his M&S Luxury Muesli today. I do feel sorry for him, actually, because he at least seemed to have some flair and imagination and the ambition to inject some appeal into the firm's products.
Maybe he didn't succeed as handsomely as he ought to have but, with M&S as with so many other businesses, that long-term success is only ever going to be product-led, and that was and is Marks's problem. Why, I even have friends and colleagues, long-standing customers, who say that the old quality and durability isn't there now. Perhaps Mr Radice, like Mr Rafferty's subject, felt he needed more time, maybe another year, to see his ideas through and deliver the sales success shareholders have been promised for so long. In any case, Mr Radice was doomed when Stuart Rose was brought in to replace the former chief executive, Roger Holmes, as M&S responded to the Green bid.
Mr Green, on the other hand, is at his laid-back best. I wrote last week that he wouldn't have to improve his offer by very much to tempt smaller shareholder such as me to back his bid, and he has been dropping hints along those lines. Personally I wouldn't mind a bit of "stub equity" as well as a few pence more on the offer. Three American funds, for example, own a whole 18 per cent of the company, about the same as we thousands of private investors put together.
So we matter a bit, and much more than we would in most companies, but Mr Green can still get his prize without our help. As so often, we find ourselves in the hands of large institutional, foreign-based funds whose attitude in the affairs of the companies they are invested in is usually dormant to comatose. I can only hope that Mr Green wakes them up.
Mr Green's isn't the only bid, or rumoured bid, in town of course. My holdings in Colt Telecom and Kingston Communications have benefited from such talk in the City, which has proved remarkably persistent in both cases. The company I am surprised has not yet found itself on the end of a Green-style bid is BT. It's still big, but it's maybe not too big to be targeted, although the regulatory hurdles for any likely bidder might be very high. Like Marks, BT has not been well led. I never understood why BT insisted on selling its mobile telephony arm a few years ago, even if it was hard up.
Now, though, the company is promising radical changes in the way it runs its infrastructure and, most importantly, seems to be concentrating on broadband, surely the great growth area. The strategy is called "the Twenty-First Century Network", so it's four years late (boom, boom), but in the case of BT, better late than never. The thing about BT is that its shares have just been completely left behind by the revival in the sector. So, somewhat to my own surprise, I have bought some more. I wonder how long the bid will be?
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