Rose under pressure over dual role at icon M&S

Published on Sunday 5 July 2009 21:43

MARKS & Spencer's shareholders will have their annual chance to grill executive chairman Sir Stuart Rose about the style of dresses it sells – but Wednesday's annual meeting could also force changes on the retailer's board.

Rose's position has been controversial for some time, with leading shareholders given only hours notice that he planned to take the role of chairman and chief executive in early 2008.

But despite threats by leading institutions to revolt, last year's annual general meeting saw Rose face more pressure to offer "pretty summer dresses" than set down a succession plan, and a protest vote against his appointment had little impact.

This year, however, shareholders may indeed force a change. A special resolution has been brought by the Local Authority Pension Fund Forum (LAPFF), a body which represents 48 local authority schemes.

The resolution calls for the board of M&S to appoint an independent chairman by July 2010, a year earlier than planned.

Roger Lawson, a director at the UK Shareholders' Association, has reportedly said the group, which represents private investors, "could well" support the resolution.

While institutions control the majority of M&S, around a fifth is owned by individuals, unusually high for a FTSE 100 company.

The LAPFF resolution needs 75 per cent support to pass, meaning private individuals could sway the outcome.

Rose may have won back some support, with a recent trading update showing a slight improvement in the retailer's fortunes, with like-for-like sales in the 13 weeks to 27 June down 1.4 per cent – better than analysts were forecasting.

Recruitment firms have, like retailers, suffered from a major fall in demand for their services in recent months, and two of the leading players, Michael Page and Hays, are expected to give more bleak statements this week.

Michael Page, which will deliver a trading statement tomorrow, saw its profits fall by around a third in the first three months of the year as vacancies fell, with little improvement expected in the period to the end of June.

The company, which employs more than 1,350 people in the UK, said its finance and accounting division was worst hit, with profits down 37 per cent in the quarter. In response it has cut more 800 staff.

Hays, which gives an update on Thursday, has also been downsizing, with a 9 per cent reduction in head count in the first three months of the year.

However, the group, which will give an update on trading on the final three months of its financial year to 30 June, recently revealed a more resilient performance from the temporary recruitment market, as employers seek more flexibility.

Fees from permanent recruitment, about half of Hays' business, were down 46 per cent in the three months to 31 March, but fees from temporary placements fell by just 14 per cent.

While many economic indicators are showing improvement, employment traditionally lags economic growth, with the number of unemployed in the UK not expected to peak until the second quarter of 2010 at just over three million, according to the CBI.

Finally, Associated British Foods will reveal the extent to which warmer weather has boosted clothing sales at its Primark arm.

The discount fashion chain put in a "first class performance" in the six months to 28 February, lifting operating profits by 10 per cent to 122 million, and analysts hope for more positive news on Primark at the AB Foods trading statement on Friday.

BUILDING ON MORE SOLID FOUNDATIONS

RECENT signs of a mild recovery in the housing sector will come under scrutiny this week as three major housebuilders – Persimmon, Barratt Developments and Bovis Homes – update on trading.

Latest figures from the Nationwide Building Society claimed sales prices rose 0.9 per cent in June, to stand at 156,442, the third increase in four months. Some housebuilders have also given indications of an early improvement. Last month the UK's largest builder, Taylor Wimpey, said the market should avoid a "severe" downturn as it reported a 73 per cent jump in forward orders since the year-end.

Persimmon, which gives an update on trading tomorrow, is also expected to offer an insight into its debt, with analysts hoping for further reductions from the 905 million a year ago. Numis Securities forecasts that Persimmon's debts will have fallen to around 600m.

Barratt, which last month reported an increase in orders, gives an update on Thursday, while Bovis is expected to report stable prices and higher sales on Friday.