M&S says thank you to staff with £65m

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Tens of thousands of Marks & Spencer shelf stackers can expect a bonus payment of several hundred pounds in cash in the next few months.

A plan being worked on by the chief executive Stuart Rose will see up to £65m distributed to 63,000 staff as reward for the company's recent turnaround.

At an average of more than £1,000 each, the bonus scheme is likely to be welcomed by staff, though City investors may need some convincing of its merits.

Profits for the year to May are expected to be more than £750m, a good result for a once troubled business.

The decision to give away such a large chunk of the profit is intended as a "thank you" from Mr Rose to the unsung workers behind the recovery.

Mr Rose will use a board meeting in the next couple of weeks to propose the deal, which seems likely to be welcomed by fellow directors.

Normally, bonuses such as this are restricted to management. Mr Rose and the rest of the board will get a payout this time too, but theirs is likely to include an element of shares.

Sources near the company claim the payout is "unprecedented" in retailing. "Everybody has played a part", said the source.

M&S quit America on Friday, selling the King's supermarket chain for £35m. Mr Rose has been disposing of nearly all of M&S's peripheral businesses to focus on rebuilding the UK company.

M&S is once again Britain's biggest clothing retailer, a position it has slowly regained since Mr Rose joined the company in May 2004. At that point M&S was the target of a £9bntakeover approach from the owner of Bhs, Philip Green, then regarded as the man with the Midas touch in retailing. Bhs has struggled of late.

The bonuses to M&S staff will be made directly into pay packets, probably this summer.

M&S will report results for the fourth quarter next month. Its shares have performed very strongly in the past year, gaining more than 50 per cent.

On Friday, they closed up another 3.5p at 556.5p. Analysts have been upgrading their forecasts, with some predicting profits of £1bn a year by 2008. Deutsche Bank has set a target for the shares of 625p.

M&S is not the only success story in UK retailing. In recent weeks, Boots and Sainsbury's have unveiled performance figures suggesting that they too have bounced back. All three companies have followed broadly similar strategies of trying to do simple things well.

The chief executive of Boots, Richard Baker, ascribes the recent sales rise at the retail chain to the decision to stick to the basics. He describes the strategy as "putting the chemist back into Boots".

Sainsbury's seems poised to regain the No 2 slot in the supermarket league from Asda. Sales are up 5.3 per cent since Christmas, well ahead of what the City was expecting. Tesco remains market leader with 30 per cent of sales.

Mr Rose has restored confidence in M&S after a decade of extraordinary management dust-ups. Upon first taking the job, Mr Rose pledged he would succeed. "My task is to bring this business back to some of its former glory," he said.

He has personally made several million pounds from the rise in M&S shares since he took over.

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