A startling reversal in Marks & Spencer fortunes

LAST YEAR, Marks & Spencer was fighting for its corporate life against Philip Green's 400p offer. The company asked shareholders to back the company's new management to get the share price up to the level that Green was offering.
Last week it did just that. With Green now concentrating his energies on investing in his core businesses, developing new furnishing shops and pledged to avoid corporate distractions, M&S's performance seems to have created a momentum in the City. A costly but successful advertising campaign devised by WPP seems to have turned consumer sentiment. Most City retail analysts have re-rated the shares to achieve further price rises.
It marks a startling reversal in fortunes. For much of the past six years M&S has been the underachieving whipping boy of British retail. Last quarter, changes imposed by chief executive Stuart Rose and his team drove a 3.3 per cent rise sales at UK stores, with a 6.3 per cent rise in food sales, 0.2 per cent rise in clothing sales and 2.1 per cent rise in home furnishings.
With much of the retail sector -particularly the mid-market - suffering its worst trading environment for 20 years, M&S's results won praise.
Though some say that M&S's previous figures were so disastrous - in the previous quarter, clothing sales fell by 3.6 per cent and home sales were down 21.4 per cent against a year earlier - that better stock control and improved ranges could not fail to deliver growth. But it seems that no one now has Rose on notice. Christmas, which will be tough for all retailers, is not the watershed it might have been
'No one thinks that if things don't work in the run-up to Christmas he will be out,' said one City analyst. 'Who would replace him? Philip Green has other fish to fry. It's all about getting the product right, improving stock management and delivering more flexible selling space.'
Even the resignation of fashion designer George Da vies has failed to dampen the City's enthusiasm for the retailer. M&S insiders were staggered by his resignation on the day of what was considered a dramatic turnaround in its trading performance. They said it was timed deliberately to take the gloss off the firm's results.
Rose was briefing journalists on Tuesday morning and said that negotiations with Da vies, the founder and creator of the Per Una range at M&S and before that George at Asda, were ongoing and would be resolved within weeks. Three hours later, Davies fired off his resignation letter.
'If he wasn't aware of the timing, he should have been,' said an M&S source, who labelled Davies a 'prima donna'.
Davies, M&S said, was demanding up to £150 million to run the Per Una brand, the best-performing womens-wear label at M&S. Rose refused. The M&S chief executive argued that he paid £125m to the Next founder last year to bring the brand under the ownership of M&S, which meant he was not about to pay a similar figure to Davies one year later.
But it seemed that both parties were striving for compromise. Discussions centred on Davies designing a new range of childrenswear - an area in which M&S had failed to deliver for several years.
M&S has yet to identify the person who will take control of a brand that produces sales of £300m a year. It is unlikely to be M&S fashion supremo Kate Bostock, who insiders say 'has enough on her plate' ensuring the rest of the range appeals to shoppers.
Davies has kept a low profile. The Liverpudlian's career was built on founding Next and devising the George range of clothing for sale at Asda. But Davies was unceremoniously bundled out of Next when the company's performance went awry.
The next phase of the autumn range goes in to M&S stores in 10 days' time, as the company starts revamping 20 stores. It is thought that it will attempt to prune its portfolio of shops, closing poorly performing high street outlets, many of which it owns. Meanwhile, there are plans for larger, out-of-town sites.
If M&S's trading continues to improve, some analysts think that the firm could hoover up poorly performing rivals in a wave of retail consolidation triggered by the proposed Boots and Alliance Unichem tie-up. Nothing would confirm a recovery more than Marks becoming a predator after being preyed upon for so long.