Outlook: Knives out after nightmare on Baker St

PETER SALSBURY, the new broom at Marks & Spencer, has not been in the hot seat for long, but he is already generating a great deal of noise. In just a few weeks he has managed to squeeze in a calamitous profits warning and now a management re-shuffle. The latter is welcome because M&S had just about the biggest board in Christendom. At its peak not long ago it was 23 members strong. This might make you wonder how anyone ever got to have their say, only the answer to that is now obvious; they didn't. Sir Richard Greenbury never let them.

Among the three directors whose chairs have been taken away is Chris Littmoden, head of US operations. His departure may have a deeper significance. His exit means that Mr Salsbury's two main rivals for the top job have both been forced to walk the plank. Keith Oates, remember, has already gone. Anyone would think Mr Salsbury has instituted a policy of bayoneting his wounded, but surely he is too "nice" for that.

The other interpretation is that he is about to offload Brooks Brothers and Kay's in the US, which have proved to be two of the group's more troublesome children. The company has denied this, but the any such decision would plainly have some logic. After years of underperformance since its over- priced purchase 10 years ago, Brooks is finally making a half decent return, and so might attract a reasonable price. A sale would also allow management to concentrate on the real issue, which is putting the UK business back on track.

The pruning of nearly a third of the group's senior management is a step in the right direction at this over-layered bureaucracy. But Mr Salsbury needs to go further. Even after these modest cuts, M&S's head office at Baker Street will still employ 4,000 people. Talk of further 500-1,000 to go at the Baker Street bunker cannot be far off the truth.

All this is only the beginning. There are still major strategic issues to resolve, such as the degree to which the company should resort to overseas buying as well as its recent merchandising mistakes. Yesterday's share bounce gives Mr Salsbury a welcome following wind, but in truth the jury is still very much out

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