Friday 6 September 2019 12:01 am

M&S’s FTSE exit is a symbol of its terminal decline

Archie Norman, the Marks & Spencer chairman, put a brave face this week on the retailer’s demotion from the FTSE 100.

Nothing to see here, he said: the business was exactly the same on the day after its relegation. Focusing on it was the reddest of herrings.

In a sense, he is right – but the decline of the “burning platform” he has repeatedly called M&S couldn’t be more aptly symbolised than by its relegation after 35 unbroken years in London’s blue-chip share index.

Unfortunately for Norman, that decline is becoming harder to arrest with each passing quarter. Stock supply issues, continuing leadership turmoil in its clothing business, ageing stores, and a pricey deal with Ocado to lever its way into the food delivery market: it’s hardly surprising that the shares are close to a 20-year low. 


Whether it’s this side of the crucial Christmas trading period or not, further management change looks inevitable – but which world-class retailer would now jump at the chance to run today’s M&S, outside the FTSE 100 and potentially destined never to return?

Read Montague for Manduca

It’s no slight against Paul Manduca, the Prudential chairman, that few of the 2.3m workers in Britain’s financial and related professional services would be able to name him as chairman of TheCityUK’s advisory council.

That doesn’t make it an unimportant job: in the decade since the trade association was established, it has fought the City’s corner in key battles on regulatory reform, immigration, taxation and corporate responsibility.

Today, Manduca will make way for his successor, who I can reveal will be Sir Adrian Montague, the Aviva chairman.

Montague’s appointment implies that he will remain in his role at the FTSE 100 insurer for some time, when there had been a growing assumption among investors that he would make way once Maurice Tulloch, its new chief executive, is properly embedded.

It is a key moment for Montague to take the reins at the lobbying group. A no-deal Brexit and a general election that could usher in the most left-wing Labour government for generations both loom large, with potentially profound implications for Britain’s financial services sector.

Montague is a solid choice at a time when the City’s response to domestic and global political tumult is about to be tested like never before.

De La Rue’s bazooka moment

You couldn’t make it up. De La Rue’s propensity for shooting itself in the foot has acquired myriad new techniques during a torrid few months, but after a string of profit warnings, contract losses and governance failings, it’s dispensed with a handgun and moved into full-blown bazooka mode.

Appointing Kevin Loosemore as its chairman is arguably the worst-timed piece of boardroom recruitment of the decade. Less than a week after a profit alert scrubbed about a third of the stock market value off Micro Focus, the software company he serves as executive chairman, Loosemore has plumped for another hands-on job.

His decision to relinquish the chairmanship of privately owned software company Iris is an irrelevant sop. For the next 12 months, De La Rue and Micro Focus will each be close to full-time jobs. Both need to rebuild the confidence of customers, shareholders and employees. Both are vulnerable to opportunistic takeover bids. Both have become graveyards for previously robust boardroom reputations.

Can either be salvaged in their current form? The share prices and sense of shareholder disgruntlement suggest that an M&A-led outcome is likely. At least two private equity firms have been circling Micro Focus for months, while parts of De La Rue remain attractive to strategic acquirers.

In each case, their board’s ability to mount a vigorous defence has been fatally undermined by their failure to deploy an invaluable commodity: common sense.

Loosemore’s acceptance of the job at the banknote printer smacks of arrogance. The offer to him, and the timing of it, smack of rank incompetence.

It has left Crystal Amber, the activist investor, with an open goal. The fund manager threatened in July to call an EGM if Philip Rogerson, the incumbent De La Rue chairman, did not step down immediately.

If Crystal Amber believes that is still the right course of action – with the wider objective of clearing out the board – it doesn’t have a moment to waste. It won’t be short of support.

Image credit: Getty

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