Outlook at Marks is still not rosy

AT least one thing is now clear. We still don't know whether Philip Green will win Marks & Spencer - although judging by some of the gung-ho media coverage in recent days, the whole matter is virtually settled and will probably be concluded by Friday teatime.

But last night's appointment of Stuart Rose as chief executive confirmed something of which we had long been certain - things had to change at the top of M&S.

Chairman Luc Vandevelde had already said he would go. And chief executive Roger Holmes has appeared to have been struggling for a while. His departure was only a matter of time.

The next interesting question will what happens to Vittorio Radice, who was recruited from Selfridges amid so much fanfare last year.

Radice has great flair, but has yet to demonstrate he knows what M&S customers want - lavishing shareholders' money on a store to make it look chic is not the same as persuading shoppers to spend.

Imagine, for a moment that M&S was not the subject of a bid. Now imagine - admittedly, not easy - that Philip Green didn't exist. The City would still have been baying for change at the top of Marks.

The company's recent performance has been dismal. M&S's loss of share in the clothing market is well-documented.

Even sales of food - which for so long marched steadily ahead while clothing struggled - have slowed.

Perhaps the great British public is becoming resistant to paying £1.80 for a plastic bowl of chopped grapefruit no matter how beautiful it looks.

And behind the scenes, that vast, sclerotic bureaucracy that selects, buys and distributes M&S merchandise to the stores looks ungainly and inefficient.

After years of waffle about the need to be 'customer-driven', M&S is still too obsessed with its own workings.

So yes, it was inevitable there would be changes at the top. But - and this is the interesting question - do changes at the top necessarily bring improvement?

The City loves change - a cynic might suggest it is always welcomed because stockbrokers' sales forces are given an excuse to tell their clients to shift money from one company to another.

But don't expect those changes always to yield wonderful results. Look at three recent examples - all in retail.

Steve Russell was eased out of the chief executive's job at Boots at the end of 2002 after a working lifetime with the company.

Richard Baker, Russell's replacement, was piped aboard in May 2003. City reaction was unanimous. Baker was A Good Thing who would shake up a company in dire need of fresh thinking.

What has happened since? Boots' share price has underperformed the stock market and the retail sector.

In January 2000, Dino Adriano was ousted as chief executive of Sainsbury to be replaced by Sir Peter Davis of the Pru.

On the day of the news, Sainsbury's share price gained 5% to 319p in celebration.

Last Friday, Sainsbury shares stood at 272 1/2p, having underperformed food retailers as a whole by a mile.

In December 2000, Bill Grimsey was brought in to run Iceland - subsequently renamed Big Food Group. Again, the City loved it - his appointment propelled Iceland shares to an alltime high.

And since? Iceland's underlying sales fell for two years. There were some signs of recovery last autumn, but it was a false dawn and more recent figures have been negative.

None of this is to say the shake-up at the top of M&S is not right. It is.

But in future, when you hear that the City is clamouring for change in the management of a company, just pause to reflect - is this change for change's sake? And will it actually make matters any better?

Ben Laurance is former editor of Financial Mail on Sunday. He was Business Journalist of the Year in 2000 for his coverage of M&S.