Mixed reviews see M & S shares fall

By DAILY MAIL REPORTER
Updated: 19:00 EST, 7 July 2000

Beleaguered Marks & Spencer boss Luc Vandevelde faces a damning indictment of his plans for revitalising the struggling stores chain just a week before he confronts unhappy shareholders at the agm.

The shares fell again yesterday as analysts gave a mixed reaction to a preview of the autumn clothing ranges and a top broking firm launched a stinging attack on Vandevelde's strategy.

WestLB Panmure, which has accurately forecast the slump in Marks' fortunes, produced a blistering report casting doubts on Vandevelde's pledge to return the company to previous levels of profitability.

It contrasts his 'naive' optimism with the more realistic outlook from Peter Davis, new boss of another troubled retailer, Sainsbury, who has created 'no false hopes'.

Emily Shamma and Philip Dorgan, in a 28-page study, say the new chairman's strategy report contained 'too many retail buzzwords, too much consultancy-speak'. They conclude that his hope of turning Marks into a global clothing retailer is wrong - 'it smacks to us of a retailer looking to run before it can walk'.

Vandevelde has pledged to 'return profits to historic levels' - implying a climb back to the £1bn peak of 1997-98 against £516m just reported. The analysts say it would take at least seven years, even if it were possible, and 'worry about a management' aiming at such an improbable target.

The report says the firm's early sale suggests it is 'losing its nerve' in the face of poor trading. C&A stores which could be snapped up by retailers such as Peacock or Next are likely to pose a threat.

The analysts' remedy is likely to be studied closely by institutional investors who have seen the value of the shares plummet from 664p in 1998 to 233p, down another 7p yesterday. They say the group should operate from fewer stores and the over-seas business should be 'pruned back ruthlessly', while more outsiders should be brought in. Marks should get out of food completely or become a major player by buying another food retailer, 'most obviously Safeway'.