Rose clears out the old guard at M&S

Half-year profits collapse as like-for-like sales fall 4% - Battle to fight off Philip Green cost £35m
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The Independent Online

Stuart Rose tightened his grip on Marks & Spencer yesterday after the struggling retailer's new chief executive fired six directors and admitted that trading had deteriorated in the past four weeks.

Stuart Rose tightened his grip on Marks & Spencer yesterday after the struggling retailer's new chief executive fired six directors and admitted that trading had deteriorated in the past four weeks.

The executive cull, which includes four board directors, will cost the group more than £2m in compensation, excluding share options. It brings to 11 the total number of senior posts axed by Mr Rose since he was recruited in June to fight off Philip Green's £9.1bn takeover bid.

Alison Reed, the finance director and 20-year company veteran, will stay on until February, giving the group a brief window to recruit her replacement. She said: "The timing is absolutely him [Stuart Rose]. But I'm excited. I want a big, proper job, not a portfolio career."

Maurice Helfgott, the director of menswear, childrenswear and home, and Mark McKeon, director of retail, international and franchise, will leave immediately, while Laurel Powers-Freeling, who runs M&S Money, will leave next month after the completion of the division's sale to HSBC.

Mr Rose, who has halved the executive board positions to three, said: "We needed to become a little leaner and a little meaner." All buying and merchandising directors will report straight to him. "M&S will either kill me or I'll cure it," he added.

The new executive team will comprise Charles Wilson, Mr Rose's long-term confidant and M&S's IT, supply chain and property director, and the new finance director. Analysts suggested Nigel Hall, the former finance director of Arcadia, as a potential successor to Ms Reed. There were also question marks over the future of Guy Farrant, the interim head of food, after M&S said it would seek to recruit someone external to try to stem the division's falling sales.

The shake-up came as M&S reported a drop in interim profits before tax to £211.7m from £339.6m. Profits were hit by £81m of exceptional charges, which included £35m to fight off Mr Green, £29.3m to shut Vittorio Radice's doomed Lifestore project and £4.6m to cover the cost of the previous board cull.

M&S broke with tradition to comment that current trading had become "more difficult" but added that, ahead of Christmas, it was too early to predict the second half. The City managed to draw scant comfort from the group's lack of profit warning, and shares in M&S dropped 2.75p to 350p. Nevertheless, analysts cut their full-year forecasts by about 5 per cent. Investec Securities is predicting profits of £685m, down from £714m - which is barely half the £1.1bn profit that M&S made at its peak in 1998. Tony Shiret, at Credit Suisse First Boston, said: "Another mini downgrade to add to the two done over the past two months does not give us much confidence that we have reached stability on the numbers."

Mr Rose said the group, which is losing market share in all areas of its business, was still in recovery mode. "Nobody's happy with sales that are not moving at the top line but we are where we are. At some point we will get back to growth," he said, warning that it could take until March 2006, the end of M&S's next financial year, for sales to improve. He predicted Christmas would be "pretty robust".

The group is trying to speed up the time it takes new designs to appear in-store. One range of T-shirts now takes 12 weeks, down from 20 weeks, and will take just five by next summer, Mr Rose said.

M&S slashed its planned capital expenditure budget to £290m from £400m. It needs to figure out the best way to refurbish its 375-strong estate before pushing the spending button, Mr Rose said.

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