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Fashion Jobs
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Reuters
Published
Jul 1, 2009
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Rose to eclipse improving trend at M&S

By
Reuters
Published
Jul 1, 2009

By James Davey

LONDON (Reuters) - Marks & Spencer (MKS.L) is expected to post an improving sales trend for its first quarter, but its trading update will be overshadowed by a growing row over the future of executive chairman Stuart Rose.

Marks&Spenser

Rose is facing renewed calls to share power at Britain's largest clothing retailer a year after he saw off an investor rebellion over his elevation to executive chairman from chief executive in contravention of corporate governance guidelines.

M&S is forecast to report on Wednesday 1 July that sales at stores open at least a year fell 1.8-3.5 percent in the three months to end-June, according to a company poll of 10 analysts. That would be an improvement from a 4.2 percent fall in the fourth quarter of its 2008-09 year.

Analysts said the outcome should be boosted by the later timing of Easter this year and more favourable weather patterns.

Like-for-like general merchandise sales, spanning clothing and homewares, were expected to have fallen 3-5 percent, having been down 4.8 percent in the fourth quarter.

Food sales on the same basis were seen down 0.5-4.2 percent, having fallen 3.7 percent in the previous quarter.

M&S's food performance, though improving, will still look poor when compared with underlying sales growth of 7.8 percent reported by Britain's third- biggest grocer, J Sainsbury (SBRY.L), on June 17.

The group's shares have lost 11 percent of their value over the past year, underperforming the DJ Stoxx European retail index .SXRP by 9 percent.

"This is a cyclical business -- more so, in our view, than the stock market has generally assumed," said analysts at Investec Securities in a research note.

"We continue to believe that the balance sheet constraints the company now operates under will prevent a more material recovery, as systems and logistics investment must be stepped up."

Three shareholder advisory groups -- Glass Lewis, Pirc, and RiskMetrics -- have called on M&S investors to support a resolution at the company's July 8 meeting (AGM) calling on it to split the chairman and chief executive roles and appoint an independent chairman by July 2010.

The resolution to force a split was filed by the Local Authority Pension Fund Forum (LAPFF).

M&S's management has recommend shareholders vote against it and has said it is committed to a succession plan that will see Rose retire in July 2011.

TESCO AGM

Tesco (TSCO.L), Britain's biggest retailer, holds its annual shareholder meeting in Glasgow on Friday, July 3. After last year's event was dominated by celebrity chef Hugh Fearnley-Whittingstall's campaign to improve chicken welfare, this year's looks set to be more sedate.

The Unite trade union has tabled a rebel resolution calling for Tesco to more effectively implement its policies on workers' rights, particularly in its meat and poultry supply chain.

The campaign is backed by corporate governance advisers Pirc, but opposed by Tesco which says existing policies ensure workers are treated fairly. Last year, Tesco comfortably saw off Fearnley-Whittingstall's challenge in a shareholder vote.

A busy week for the sector will also see results published by ASOS Plc (ASOS.L), the online fashion retailer, HMV (HMV.L) and Carpetright (CATVU.L) and Game (GMG.L).

(Additional reporting by Mark Potter; Editing by Dan Lalor)

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