M&S is due to make an official announcement on the decision today. However, it is known that Sir Richard, the company's chairman, will remain at the group. Fellow directors had feared that he might leave if he did not get his way in the power struggle.
It has also emerged that there will be no power-sharing arrangement between the two challengers for the chief executive position, Keith Oates, deputy chairman, and Peter Salsbury, joint managing director. This ends speculation that the two might be made joint chief executives with Sir Richard as chairman. Sir Richard's favoured outcome has been for Mr Salsbury to succeed him. It was not clear last night if any directors were leaving the company.
Today's statement will end several weeks of fevered speculation about who will lead Marks & Spencer into the next millennium. Sir Richard, 62, is due to retire in 2001 and has been under intense pressure to separate his combined roles of chairman and chief executive.
In a break with its somewhat stuffy approach to public relations, M&S has hired Alan Parker, one of the City's top spin doctors, to handle today's announcement. Mr Parker, who heads Brunswick public relations, was at the Baker Street offices in London yesterday evening as the board prepared its statement.
It was a day of tense drama at Baker Street as directors came and went in chauffeur-driven limousines. David Sieff, a non-executive director and a descendant of one of the company's founding families, arrived in a Mercedes. Sir Martin Jacomb, chairman of the Prudential and head of the non-executive committee, followed in a chauffeur-driven Bentley. Most of the directors swept into the building via an underground car park and declined to give comments to waiting reporters.
The battle of Baker Street has been an extraordinary saga which has engulfed the usually staid retail giant in a wave of speculation and boardroom infighting.
The seeds of the current row were sown back in the spring when Sir Richard declared that the rest of the M&S board had asked him to stay on as chairman until he is 65.
This was subsequently disputed by a fellow director, who said that no decision had been taken. The issue subsided again until this month when M&S reported a sharp fall in profits and said it had still not decided on who would take over from Sir Richard on his retirement.
The City began to demand answers. Soon the board appeared to split into two camps. As Sir Richard began to push for his chosen successor, Mr Salsbury, to accede to the throne, Mr Oates started to press his case.
Sir Richard jetted off to India for a supplier visit-cum-holiday. While he was away, Mr Oates presented his grand plan for the business to the company's non-executive directors. His supporters leaked his views to the press and all hell was let loose.
A furious Sir Richard cut short his trip to India and the rest of the board were called back to Baker Street for a crunch meeting.