Outlook: Is it too late to stop the rot at M&S?

THAT THERE was something seriously wrong at Marks & Spencer has perhaps been obvious for some time. Certainly the very public boardroom battle over Sir Richard Greenbury's job seemed strongly symptomatic of it. Now we know for sure. The scale of the profits and sales collapse announced yesterday would have humbled even the most accident prone of companies, but for it to have come from the doyen of British retailing is pretty close to nuclear.

Without doubt, this is one of the worst ever setbacks in M&S's long and distinguished history. M&S profoundly misjudged the market and is paying a heavy price for its over optimism. More worrying still, its trading performance over the Christmas period seems to have been significantly worse than most of its competitors, with volume down right across the board.

The consequent loss of market share may at this stage be quite marginal, but there is a danger that things could snowball rapidly from here on in.

The brand and image of M&S has seemed to many tired and past their sell- by date for some time. Its clothing ranges too have seemed out of touch with modern consumer tastes and trends.

There are elements in this statement, of the "kitchen sink" exercise that all new chief executives are careful to perform when they take up the reigns of power. Obviously, it suits Peter Salsbury to get all the bad news out in the open early in his tenure, so that he can establish a new low point from which to build.

Unfortunately there seems to be more to it in this case. Even Mr Salsbury cannot be certain that this is the bottom and he is keen to stress that the company faces a profoundly difficult year.

Much store is being laid in the new management structure announced yesterday. For the first time an overall head of UK retailing is being appointed, though how this job differs from that of Mr Salsbury is not entirely clear. Less clear still is whether this redefinition of lines of responsibility amounts to any more than a reshuffling of the existing management pack.

For the first time also the group plans to recruit external talent into a beefed up marketing department. Time was when M&S could rely on the strength of its brand to pull the customers; now, apparently, it needs to advertise and indulge in gimmickry.

M&S is also finally giving in to the call of the cost cutters. Mr Salsbury refuses to be drawn on whether the new strategy means job losses, but there can scarcely be any doubt about the meaning of the new teams brief to "go through the organisation layer by layer seeking out opportunities for savings". This too will be a first for M&S, which has traditionally seen headcount reduction as a mark of business failure.

So with the shares at a five-year low and profits having taken a bath, does this past annus horribilis for M&S really mark the bottom? To believe that it does is to think that the power of the brand is still fundamentally so strong that all that is needed is a sharp tug on the tiller to set the vessel back on course. The suspicion must be that the task is a good deal more difficult than that.