Jeremy Warner: Has the tide turned for M&S? Dividend decision will tell it all
Wednesday 01 April 2009
Outlook Once the City's pin-up boy, Sir Stuart Rose, chairman and chief executive of Marks & Spencer, has had his fair share of brickbats since the downturn on the high street first started to bite a year and a half ago. Might yesterday, when the group was able to announce that it had been swimming against the recessionary tide rather more strongly than anyone thought, have marked a turning point in his fortunes?
OK, so like-for-like sales in the final quarter were still down 4.2 per cent, which set against the main supermarket groups looks poor, but this was also a big improvement on the 7.1 per cent decline of the third quarter and much better than anyone had been expecting. The news had short-selling speculators running for cover, and one wrongfooted analyst complaining bitterly that not only had M&S been guilty of cynical news management but that it had also been economical with the actualité on market share guidance. Poor dear. It must have hurt to have got it so wrong.
In any case, M&S seems to be getting a grip once more. Success with the new Portfolio womenswear range and the group's "dine-in" food promotions has got things moving in the right direction again. The fightback, both in foods and clothing, appears to be working. So much so that it is now even possible that M&S might be persuaded to hold the final dividend, an idea thought out of the question just a few months back. It's going to be a lively debate.
Much depends on how trading shapes up over the next month. Anything that increases debt and strains investment will be judged by the board as too high a price to pay. But if directors can see their way to dividend cover beginning to improve again in 2010/11, then they will be minded to protect income and pay up.
At this stage, the decision is too close to call. Pre-tax profits for the last financial year are expected to come in at about £600m, with consensus forecasts settling at around £470m for 2009/10. Even the second of these numbers would cover the dividend – just about. The question is, what's the outlook the year after?
Historically, M&S has proved relatively resilient in a recession. This time around, it has been rather harder hit. Is that Sir Stuart's fault, as some in the City suggest? Sir Stuart admits to mistakes, particularly in foods, but insists that the problem is 75 per cent market-driven. Some shareholders are demanding that he split the roles of chairman and chief executive, or go. With no obvious successor, that still looks like the wrong call. Yesterday's more positive news plainly helps Sir Stuart's cause, but he needs to keep up a steady flow of the same to vanquish his critics entirely.
EastEnders Christmas specials are known for their shouty, over-the-top soap drama but tonight the show has done itself proud thanks to Danny Dyer.
- 1 Planes go hybrid-electric in important step to greener flight
- 3 British actor Idris Elba cannot star as James Bond because he is black, says shock jock Rush Limbaugh
- 4 Hip hop is both racial and political, and for Iggy Azalea to suggest otherwise is insulting
- 5 Man hospitalised with pneumonia after downing eggnog at office Christmas party
Antonio Martin shooting: Black teenager may have tried to ambush patrolman, says police officer's lawyer
Orphan kangaroos spend Christmas without their parents
Northern Lights above Britain: Stunning Aurora Borealis illuminates Northumberland sky on Christmas Eve
New route to Mars could make manned mission much cheaper and easier
Isis 'did not shoot down Jordan war plane' before capturing pilot, says US
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
British actor Idris Elba cannot star as James Bond because he is black, says shock jock Rush Limbaugh
Rozanne Duncan: Ukip expels councillor for 'jaw-dropping' comments made in BBC TV interview
Germany anti-Islam protests: 17,000 march on Dresden against 'Islamification of the West'
Ukip member gets into Christmas spirit with Union Flag plea to Santa 'for our country back'
Panic Saturday: 13 million Britons spend £1.2bn – while 13 million others across the country live in poverty unable to afford food
iJobs Money & Business
Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...
£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...
£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...
£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...