M&S defends Rose taking chairman role

MARKS & Spencer last night firmly rejected fears that the surprise promotion of chief executive Sir Stuart Rose to executive chairman contravened City guidelines on corporate governance.

Concerns over the move came as M&S revealed that Rose had agreed to stay with the retailer for an extra two years, to July 2011, having previously said he would remain until 2009.

An M&S spokesman denied that the change fell foul of the guidelines set out in the 2003 Higgs Report, which warned of the dangers of a concentration of power at the top of a company.

Derek Higgs, a former investment banker, recommend that half the members of a board should be independent, non-executive directors. His report specifically said: "A chief executive should not become chairman of the same company."

But the M&S spokesman said yesterday: "The corporate governance code says 'comply or explain', and our explanation is that the board feels that Stuart is the best to do the job.

"We talked to leading shareholders prior to the announcement and they were broadly supportive. You have to start with who is the right person for the job."

The spokesman added: "He has delivered a major turnaround at the group, has 35 years of retailing experience and wants to finish what he started. By relieving Stuart of some of his responsibilities, such as retail and human resources, it will free him up to spend more time on executive management."

Rose's move is part of a wider boardroom shake-up at the high street retailing icon.

Non-executive chairman Lord (Terry) Burns will step down from M&S on 1 June, while finance director Ian Dyson will take on additional responsibilities, including managing the group's store network and personnel.

Dyson already handles IT, logistics, property and store development. An M&S spokesman declined to comment on speculation that Dyson, a long-term lieutenant of Rose, was being lined up as an eventual successor for the top job.

Rose has said he wants to increase overseas revenues from a current 7 per cent to between 15 and 20 per cent within five years. Recently the group announced it was moving into the Balkans in a joint venture as part of that international drive.

Lord Burns, in a statement to the Stock Exchange, said: "Since Stuart returned to M&S, the company has made substantial progress.

"It is my view and the unanimous view of the independent directors that placing Stuart in this new role creates the right leadership structure for the company."

Nick Bubb, retail analyst at broker Pali International, said: "There was no obvious successor. And this allows Stuart to work through the current downturn – I don't suppose he'd want to leave on a low note – and make sure oversees growth is well underway."

M&S also said Kate Bostock was assuming responsibility for all the group's clothing operations, excluding its Per Una range, and would be promoted to the board of directors.

Steven Esom, head of food, will also join the board, while the former chief executive of hotels group Hilton and Scottish hotels group Stakis, Sir David Michels, is joining the company as deputy chairman and senior independent director, also on 1 June this year.

BELT-TIGHTENING 'HAS BEGUN IN EARNEST'

SALES gloom returned to the high street in February as shoppers put the brakes on spending, retail figures showed today.

Consumers tempted out by January sales stayed away last month as like-for-like sales rose by 1.5 per cent compared with February last year, the British Retail Consortium (BRC) said.

The figures confirmed January's better-than-expected 2.6 per cent sales lift to be a short-lived revival as shoppers were buffeted by surging food and petrol costs, rising household bills and the prospect of more expensive mortgages.

The high street gloom would have been worse still if not for the boost to health and beauty products from an early Mother's Day, the BRC said.

Food retailers were the best sales performers in February – thanks to high commodity prices and intense competition between the "big four" supermarkets – although the BRC added that price-conscious shoppers were cutting back on premium-end products.

But sales in furniture stores fell back sharply after January's clearances amid consumer caution and fears over the housing market. Clothing also declined for the fifth month in a row despite continued discounting and promotions.

BRC director-general Stephen Robertson said the consumer belt-tightening "began in earnest in February" when the Christmas and New Year credit card bills came in.

The current difficulties faced by retailers amid stiff economic headwinds prompted Robertson to call for urgent action from Chancellor Alistair Darling in tomorrow's Budget.

He added: "Both retailers and consumers are being squeezed by sharp increases in utility bills and fuel costs. So the Chancellor's theme should be a Budget to revive the economy, rather than one piling on new taxes and regulations."

KPMG's head of retail, Helen Dickinson, said: "Caution about the outlook remains the order of the day".