David Prosser's Outlook: M&S climbs the £1bn summit, only to be faced by a rather nasty bout of vertigo

As both Avram Grant and Sir Alex Ferguson will no doubt be reminded today, football managers are only as good as their next match. It's a lesson that Sir Stuart Rose, the chief executive of Marks & Spencer, is also about to learn – the latest stage of the M&S recovery yesterday failed to impress the market, which is more concerned about the extent to which the retailer can ride out a consumer spending slowdown.

There are two schools of opinion on Sir Stuart. His supporters claim he has transformed the busine ss since accepting what was, on arrival in May 2004, the toughest job in retail. A tired brand has been revived, prices cut, outdated store formats overhauled and, above all, financial performance dramatically improved – M&S profits last year topped £1bn for the first time in a decade, up from £556m in the year Sir Stuart joined.

The converse argument is that Sir Stuart's undoubted charm should not disguise M&S's underlying problems – that the short-term improvements were easy hits and that the retailer is not as well placed as it should be to deal with the impending consumer slowdown. There's also the issue of two ill-timed corporate governance rows.

Certainly, it is fair to say much of the City has never been convinced by Sir Stuart – one reason why M&S shares have been lacklustre, particularly over the past 12 months, during which time they've dropped 44 per cent. Equally, if shareholders had, four years ago, been guaranteed the sales improvement Sir Stuart has delivered, they would no doubt have jumped for joy.

Where now, then, for M&S? Sir Stuart says the correct response to a consumer slowdown is to bear down on costs while planning for the long term – capital expenditure for the year ahead will be up to £900m, with plans for further store improvements and expansion in both food and international operations.

M&S has some advantages. It owns £5bn worth of property, rather than leasing stores, and there is scope for increasing market share – not least in food, where it is to begin selling branded products. That should help make the retailer a more natural place for shoppers' regular grocery trips, a sector of the economy likely to be resilient in a downturn. In addition, while Sir Stuart unveiled a sizeable increase in M&S's debt yesterday, the company is under-borrowed compared with its rivals.

Cost control is challenging, however, given soaring food price inflation and it is plain the slowdown has already begun. Like-for-like sales in the first quarter of this year were down 1.7 per cent, with food and clothing both slipping. Margins and profits will slide further in the year ahead, with the headline figure now likely to come in below £900m.

And then there's the problem of Sir Stuart himself. That he continues to insist it is necessary for M&S to flout corporate governance rules by appointing him executive chairman smacks of a certain arrogance. So did his failure to realise that investing in a business run by M&S non-executive director Martha Lane Fox would prompt accusations of a conflict of interest.

In the grand scheme of things, these rows are minor issues. But viewed in the context of Sir Stuart's insistence yesterday that M&S can ride out a consumer downturn by remaining aggressive, there is also a sense that arrogance may have bred complacency. That's why the jury is still out on his tenure.