Outloo: Another false dawn leaves Marks under a cloud

IT IS always darkest just before the dawn, or so they say. The fifty thousand small investors who have joined the Marks & Spencer share register over the past year and a bit in the hope that such a powerful brand is bound to recover at some stage, have good reason to think otherwise. For them, the night just gets darker and darker. There have been more false dawns than you can shake a stick at.

Even the announcement of a new "outsider" marketing director, the first time M & S has made such an appointment, failed to lift the gloom yesterday. The City had hoped for some global retail superstar, though with Peter Salsbury already occupying the chief executive's chair, it is hard to imagine why such a figure would want to join. Instead, it got a Woolies foot soldier. It may be that things are so bad that M & S on the way down has now passed Woolworth's on the way up, but somehow everyone expected more.

With the shares at a six year low, is it really possible for things to get any worse? The honest answer is yes, it probably is. Nobody expects good news from Marks & Spencer any longer, so at least Mr Salsbury doesn't have to worry about managing expectations. It is now an open secret that M & S has had a horrible start to the Autumn season, despite ecstatic press reaction to its Autumn range earlier this year.

At this stage, it is still possible to blame it all on the unseasonable weather, but the moment of truth is approaching fast. On top of its company specific difficulties, M & S also has to deal with the arrival of Wal- Mart in the UK via its acquisition of Asda, the effect of which is to throw an oversized shark into Britain's protected little pool of established retail players.

Then there's the whole e-commerce revolution, which according to some is going to make retailers as they presently exist largely redundant anyway. This may be an exaggerated view, but the effect on prices and distribution is nonetheless bound to be far reaching. Mr Salsbury, in the hot seat for just nine months so far, may not yet look like a man with the weight of the world on his shoulders, but he must begin to feel like one.

The shares are now so low, that their once unassailable premium rating has now wholly disappeared. At 4.5 per cent, the stock yields nearly 50 per cent more than the retail sector average. Presumably the dividend is not in doubt, but few expect it to grow again for quite some while. Eventually, the dawn always arrives and certainly M & S continues to look a better recovery prospect than Sainsbury's. But there's little sign of sunrise yet.