When Sir Stuart Rose stepped down as chairman of Marks & Spencer on January 4 2011, the retailer’s share price closed at 374.4p. Last Friday night, it closed at 341.1p, down approximately 9pc.
But in the intervening 18 months, the tide of opinion against the nation’s once favourite retailer has turned far more dramatically than that price fall might suggest.
The departure of Sir Stuart – itself a much drawn-out affair – coincided with an apparent falling out of love with the retailer by the great British public.
On paper, the new guard – Citigroup banker Robert Swannell as chairman, Marc Bolland as chief executive – are more than up to scratch. Swannell has decades of experience in the London markets, while Bolland enjoyed successful stints at Wm Morrison and Heineken.
But where Sir Stuart’s reign was defined by a renaissance of the brand, reflected in the growth of its Simply Food stand-alone stores and a focus on its UK business, Bolland’s reign, to date, has seen it venture into markets past, such as France, and an apparent stagnation of the brand and what it stands for.
Yes, there have been some smart moves under Bolland’s tenure. Its move to open bank branches is perhaps the best of these, although this is more to do with HSBC’s smarts than M&S’s.
That said, its financials continue to suffer. Group sales were down 0.7pc in the first three months to the end of June, with like-for-like sales in the UK off 2.8pc. The few bright spots were its food sales, up 0.6pc on a like-for-like basis, and internet sales, up 14.9pc.
Clearly, not all of M&S’s current problems can be fixed by Bolland. The UK’s continued economic malaise is in large part responsible for what is playing out at the retailer, along with the country’s continually strange weather patterns. Some of the problems he is facing are clearly of a historic nature – such as the knitwear shortage at the start of the year which was the result of earlier long-term changes to M&S’s supply chain.
Its shares, as bankers have started to notice, are now down 46pc from their peak in late 2007. It is perhaps unsurprising then that financiers have started to wonder if the company could once again be open to some form of third party offer?
Many will remember Sir Philip Green’s approach for the retailer which led to the installation of Sir Stuart as chief executive to defend the business back in 2004, and the opposition Sir Philip faced from the retail sector.
Much has changed since then, however, and the national psyche is more open to takeovers of cherished national brands – as seen in Kraft’s £11.5bn swoop for Cadbury in 2010.
As The Sunday Telegraph reports, the fact that bankers have started to look at whether some form of leveraged takeover might be possible says much about the sentiment toward the company. Despite the drop in shares, a willing third party would still need significant firepower – M&S’s market capitalisation was £5.44bn on Friday night.
Such a deal would require significant amounts of debt, which would most likely need to be raised in the US due to the slowdown in the UK debt markets.
One veteran retailer I spoke to also pointed to the size of M&S’s pension deficit – £1.3bn at the last full actuarial valuation in March 2009 – and questioned whether that might be a deal-breaker.
What is clear is that while a takeover may not be forthcoming immediately – and certainly no direct approaches are thought to have been made – when a company moves under the watchful eye of investment bankers, there is often no smoke without fire.