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MARKET COMMENT
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It looks like the story of Marks & Spencer (LSE: MKS) is about to move onto the next chapter. The company re-iterated today that Luc Vandevelde would become part-time chairman from January 1st, to spend 60% of his time at the retailer. It looks like the rest of his time will be spent setting up a private equity fund. Vandevelde joined the company at the end of February 2000. At the time, Marks & Spencer was in a downwards spiral. Profits of £1.1b for year ended March 1998 became profits of 'just' £650m the year after. The popular theory was that the company had sacrificed investing for the long term in favour of short-term profits growth and, in particular, the crown of the first UK retailer to surpass £1b in annual profits. When Vandevelde joined, the share price had already fallen from over 600p to just 250p. Rumours of a bid by Tesco (LSE: TSCO) and interest from the serial retail chain acquirer, Philip Green, dominated the papers. Following Vandevelde's appointment and a 15% fall in profits to £550m in the next financial year, the share price dropped as low as 170p. Since then, the turnaround has been remarkable. Two years ago, it seemed like M&S could do nothing right. Now, thanks to some fresh thinking at the top, the company appears to be back firmly in investors' good books. The latest results showed a 30% increase in half-year operating profits. In share price terms, Vandevelde's reign has been a great success. The shares are some 30% higher than when he joined, although they have slipped a little this year. Over the same time period, the FTSE 100 has fallen by some 40%, making M&S one of the best performing blue chips of recent years. While there have been press reports of weaker trading in recent weeks, M&S's shares look reasonably priced at 16 times profit estimates for the current financial year. The question is more perhaps whether Vandevelde is leaving whilst the going remains good. Retailing is a notoriously competitive business. The fact M&S has managed to turn itself around so successfully bodes well, indicating the strength of its position on the high street. However, investors could be forgiven for secretly hoping that Luc Mark II is waiting in the wings should it ever stumble again. > Marks & Spencer discussion board