A long road back for Marks

THE next chairman of Marks & Spencer faces challenges every bit as large as Luc Vandevelde did when he took the helm four years ago. One devastating chart unveiled at the group's results presentation in the City says everything about the challenge ahead.

Total clothing market share has fallen, with womenswear down from 11.4% to 11%, lingerie and childrenswear down, and only menswear showing a gain.

The transformation in menswear is largely down to executive director Maurice Helfgott, who came up with the idea of segmenting the men's ranges into different brands.

His reward is to be handed the now declining food business, where competition from the big grocery chains has hit comparative advantage.

So who will lead the Marks & Spencer transformation? The answers are as elusive as ever.

Chief executive Roger Holmes is doing his best to portray himself as a man with a mission, ready to introduce new ranges such as 'Limited Collection' for women and to turn the traditional stores upside down. But so far all he has managed is to keep profits more or less stable by cost cutting.

Vittorio Radice has so far shown himself able to spend money, as seen at Lifestore in Gateshead and the group's new headquarters at Paddington Basin in central London, but unable so far to deliver his sales targets.

Indeed, there is an acceptance that some of the new furnishings might be a trifle too contemporary for M&S.

Departing chairman Vandevelde seems a little puzzled about why he is going at all. He believes that his other commitments at Carrefour and elsewhere were nowhere near enough to require his departure. Now there is division about his successor. Luc says there is a 'platinum, gold and bronze' short list being looked at by headhunters, the board and no doubt shareholders like Brandes.

Vandevelde appears to have no trouble at all with the analysts' favourite Stuart Rose, although Holmes is probably a little less enthusiastic.

But City advisers seem cool to Rose, arguing that his public campaign for the job is unseemly.

Yet it is accepted that what is required is an eagle-eyed retailer. Whatever happens, M&S needs to act fast.

The longer the speculation goes on, the less decisive the firm will look. The shadow will cast doubt on its whole business strategy. Confidence and brass are critical for good fashion retailers.

Sarin's task

EVERYTHING about Vodafone is larger than life. Profits at £10bn are impressive, but so are the goodwill write- offs of £15.2bn. With the company still busy buying minority holdings, it may be years before Vodafone produces meaningful figures.

What it does have is an enormous cash flow. It is seeking to put some of this cash to good use by buying back shares - £1.1bn last year and a further £3bn next year - and the dividend is rising.

The surprise in the latest numbers is the decision to buy in the minority in Japan for a cool £2.6bn. It is not going to stop there.

Chief executive Arun Sarin makes it clear that he still hopes to take full control of Italian associate Omnitel and of Cegetel in France. Vodafone remains a company where dealmaking is a key element of strategy.

We saw this at the end of the year when Vodafone finally pulled the plug on its effort to buy AT&T Wireless, so that it would have a wholly-owned operation in the United States.

The market was right to be relieved that this deal fell through given the subsequent problems that emerged.

But that does not mean that Vodafone is any closer to resolving the problems it has in its minority position with Verizon.

Despite much cooing about what a wonderful relationship the companies have, this clearly cannot be the whole truth given the willingness of Sarin to drop it had AT&T Wireless come its way.

Problems lie ahead with the current dividend agreement with Verizon yet to be renegotiated.

As good a company as Verizon Wireless is (the customer base climbed by 17% in the last year), the failure to tie down a secure, permanent relationship in the world's largest consumer market does hinder Vodafone's global prospects.

One should never forget, however, that Vodafone is still a young business with all the balance sheet and relationship untidiness which comes with this.

Sarin has inherited the job of consolidator in an industry where the technological and regulatory goalposts are constantly shifting.

Investors have to believe that Vodafone has a strong enough grip on the next generation of networks to keep delivering.