However sparkling Marks & Spencer's full-year figures turn out to be when announced on Tuesday – some analysts expect profits to breach the £1bn mark for the first time since 1998 – all eyes will be on the year ahead, and what once again is proving to be the intractable problem of succession.
Sir Stuart Rose, the retailer's chief executive, sees himself as too independent minded for the box-ticking, politically correct straitjacket in which a publicly listed business must operate today. Parachuted in as chief executive in 2004 to fend off Philip Green's bid approach, he not only saved the com-pany from being taken overbut revived its fortunes, putting in a new management team and pushing up profits every year since.
Even so, Sir Stuart's decision to become executive chairman – combining the roles of chairman and chief executive – appeared to outsiders to smack of megalomania. The share price, which two years ago hit more than £7, is now back to less than £4.
Some City investors feel that Lord (Terence) Burns, the former Treasury mandarin and M&S non-executive chairman, who is being paid £450,000 to leave the company after less than two years, has been a steadying influence on Sir Stuart. Yet Lord Burns was persuaded to put his name to a five-page letter signed by him "explaining" why his departure and a board reshuffle should be necessary to make the search for a successor smoother. The explanation simply does not hold water. The truth is believed to be much simpler – Sir Stuart held the board to ransom.
Early this year, before the impact of the credit crunch was felt on the high street, Sir Stuart was telling friends he was exhausted and looking forward to leaving in 2009, as in his contract. He had always said that he and Steve Sharp, the marketing director who has worked with him since they met at the department store group Debenhams in 1989, would stay for five years and not a day more.
But by early spring, the consumer downturn had begun to bite. Here was M&S, surrounded by tough competition, facing the first economic recession for 16 years, and its leader was poised to depart. Sir Stuart also let it be known he was being wooed by private equity groups. Panic may be too strong a word, but there was certainly a consensus among the non-executives that letting him go in 2009 without a successor in place was not an option.
Lord Burns arrived at M&S after a boardroom row. Paul Myners, the chairman who had brought in Mr Rose, as he then was, to defend the Green bid, was in effect pushed out for no other reason than that he and Mr Rose worked well together.
Insiders stress there has been no acrimony between Sir Stuart and Lord Burns, but neither was there any great rapport. Sir Stuart told colleagues privately that he felt that Lord Burns should have done more to look for M&S's next chief executive. The task of securing the succession is supposedly down to the board, particularly the chairman. Yet so far, no outside candidates have been put forward.
A vacuum loomed and Sir Stuart could therefore name his price for staying until 2011. Instead of demanding more money, he asked to step up to be executive chairman, which has been the practice at the company for all but the past 10 years.
Sir Stuart, who spent 17 years at M&S earlier in his career, takes the view that the company is best led by one strong leader, called the chairman. Lord (Simon) Marks, the son of the founder, ruled as chairman for 48 years, as did all his successors until Sir Richard Greenbury agreed to become non-executive chairman in 1999, with Peter Salsbury as chief executive. That arrangement proved disastrous for the company. Some might ask, therefore, if M&S was highly successful for most of its 105-year history being run by an executive chairman, why not return to that arrangement?
Sir Stuart and his advisers were well aware that unifying the roles of chairman and chief executive was against the combined code on corporate governance put together in 2003 by the late Sir Derek Higgs, although this does allow companies to continue the practice if they can explain their reasons for not complying. But sadly for M&S, some City institutions did not buy the rationale.
In order to deflect criticism, Kate Bostock, head of clothing, and Steven Esom, recently arrived from Waitrose to head food, were promoted to the board on plump new salaries. Ian Dyson, the retailer's finance director, was given "broadened responsibilities", and Sir David Michels, fresh from the boards of British Land and the troubled RAB Capital, was appointed deputy chairman. These moves are described by M&S as "balancing controls to mitigate the governance concerns that such a structure might otherwise engender". The City saw them as merely cosmetic.
Yet, far more important for M&S than a corporate governance controversy is the lack of succession. It was exactly that issue that the retailer foundered on back in late 1998, when its profits halved. Sir Stuart is staying on supposedly to groom the right person from within his own ranks. But it is hard to see any of the potential internal candidates stepping into his shoes.
Ms Bostock may be an able buyer with a good eye for fashion, but she has no experience of food retailing or of dealing with the City. Mr Esom joined after missing out on the top job at John Lewis and is a more likely candidate. However, he lacks any experience of the clothing side of the business or of heading a public company. He is imbued with the culture of the John Lewis group, hence his proposal to bring in non-M&S branded goods, making the food offering ever more like Waitrose.
Mr Sharp, who will also stay until 2011, has no interest in being boss, but he must be pondering the future of his phenomenally successful "this is not just food, this is M&S food" campaign if branded goods arrive. The head of the retailer's international division, Carl Leaver, whose background is mainly in hotels, was tipped for the top last year but his failure to be promoted to the board is thought to indicate that he is no longer in the running.
For long-term watchers of M&S the tortuous goings-on over the past couple of months are horribly reminiscent of the mid-1990s, when Sir Richard Greenbury, then chairman, told four of his executives they were in the running to succeed him, so creating an atmosphere of distrust and feuding.
But today's board members need to pull together. Trading has proved tough in the last quarter of the year to 31 March, and even the usually resilient food division, which now accounts for half of the retailer's profits, has underperformed. The real concerns, though, are for the current financial year where, despite a fillip from the mini heatwave this month, analysts expect lower profits than in 2007-08.
Investors would be wise to set aside their concerns about governance and consider the direction the share price might have taken had Sir Stuart, with no successor in sight, announced he was leaving in 2009. They might do better directing their energies into urging him to find a successor from outside the company as soon as possible.
Judi Bevan is the author of 'The Rise & Fall of Marks & Spencer ... and How It Rose Again' (Profile Books)
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