Sir Stuart Rose, executive chairman of Marks and Spencer, said he would stand down as chief executive next year, as speculation mounted that John Dixon, director of food, was edging ahead in the race to succeed him.
Sir Stuart, unveiling better-than-expected trading in the retailer’s first quarter, said he would relinquish the chief executive’s role next year, but not until a successor was found. He also insisted that he would then stay on for a period as chairman.
A sales performance from the food division at the top end of expectations, and praise for its management, prompted speculation that Mr Dixon’s star was rising.
However, Sir Stuart insisted Mr Dixon was one of a team, and that observers should “stop trying to jump to any conclusions. Out of the box will pop a candidate some time in 2010.”
M&S is speeding up its hunt for a new chief executive, and could begin looking as soon as September.
M&S is facing a shareholder revolt at its annual meeting next week over pay, trading performance and succession. For more than a year the retailer has been under pressure from some investors because it agreed to allow Sir Stuart to combine the roles of chairman and chief executive.
Tensions with shareholders are threatening to spill over into board relations. Sir David Michels, deputy chairman and senior independent director has indicated that he would like to be chairman, while Sir Stuart has signalled he would not favour the appointment.
Sir Stuart also appeared to distance himself from comments that Sir David made when it was announced that Sir Stuart had given up more than £1m of shares to avert a showdown with shareholders.
Sir David irked some investors at the time by saying that he was “disappointed” at the “unexpected” opposition of shareholders to a multi-million pound bonus scheme for
“I have never used the words ‘surprised’ and ‘disappointed’,” said Sir Stuart, adding that “Sir David Michels is the deputy chairman and senior independent director and he’s entitled to have a voice.”
But he insisted there was “no gulf” between himself and Sir David and he had signed off on the statement.
Sir Stuart also sought to play down the differences with shareholders wanting to split his role through the appointment of an independent chairman by next July.
He said M&S also wanted to split the roles but would do so by appointing a new chief executive next year.
“There is no disagreement about the end game . . . What we have is a disagreement about is the route by which we get there,” he said.
Sir Stuart’s comments came as the retailer revealed the recent warm weather had lifted the group’s operating performance.
In the 13 weeks to June 27, group sales rose 2.9 per cent, with UK sales up 1.7 per cent. UK clothing sales rose 1.4 per cent, while food sales gained 2 per cent. International sales increased by 15.9 per cent, and online sales jumped 28 per cent.
UK like-for-like sales, which excludes new stores, fell 1.4 per cent while like-for-like food sales fell 0.5 per cent – a were slightly better than analysts had been expecting and a vast improvement on the 6.1 per cent decline on in the fourth quarter.
Like-for-like “general merchandise” sales, comprising mostly clothing, fell 1.4 per cent, a slightly worse performance than the fourth quarter.
Shares in M&S rose 3.7 per cent to close at 317½p on Wednesday.
Sir Stuart acknowledged that some of the improvement in sales was due to improved weather over the period.
“It’s not all weather, but clearly last summer that [aspect] fell apart from mid-May onwards right the way through, and so we’re up against some weaker weather comparatives,” he said.
He added that the run-rate of food sales – a chronic underperfomer last year – improved for the third consecutive quarter under the direction of John Dixon, who became head of M&S’s food division last year and has pioneered some of the group’s value offerings, including the ‘Dine in for £10’ offer.
“In foods we had some well-aired problems operationally, which we’ve now fixed to a large extent, and we’ve certainly looked very hard to make sure deals and value without any diminution of quality has been the name of the day, and that’s beginning to show results,” he said.
The group’s “Wise Buys” range of frequently bought food staples that affect consumers’ perceptions of value now accounts for 18 per cent of food sales.
In clothing, a range of vintage-inspired clothing that was released to celebrate the 125th anniversary of the group’s founding, proved especially popular, helping M&S add 0.3 per cent of clothing market share in the quarter.
“The spot dress we had out for our 125th anniversary celebration flew off the shelves, and I’ve had thousands of requests for more,” Sir Stuart.
“The hot fashion item at the moment is leggings but equally, in every department I can find you hot-ticket items.”