Bet on new M&S boss

There's still weakness across M&S's general merchandise (clothes and homewares) business and criticisms abound about the appeal of the retailer's clothes, stock flow and outdated stores. The catalogue of City gripes should mean Mr Rowe has plenty of opportunities to press investors' buttons in May when he sets out how he intends to revitalise performance. But news of Mr Rowe's appointment has already been well received, helped by the fact he's a 'lifer' with the company, having started as a Saturday boy more than 20 years ago.

Indeed, Mr Rowe's track record supports his promotion to the top job. Prior to his appointment, he was credited with turning around the M&S food business - which continues to grow amid a deflationary environment. He took over the general merchandise division midway through last year, but it's fair to say none of his changes could be reflected in the numbers just yet. There's more work to be done to improve general merchandise sales and we expect most of the change to focus on pricing and product quality. Dubbed a 'real trader', we reckon Mr Rowe is probably the right man for the job.

While we think the shares will benefit from excitement about the new appointment and a new strategic impetus, we don't expect a miraculous recovery during the fourth quarter. Like-for-like clothing sales have fallen in 16 of the last 17 quarters, including a 5.8 per cent fall in the third quarter. But at least certain trends - some out of the company's control - are normalising. The weather - a major issue in the third quarter - has been a little more normal so far this year, and management has taken action on pricing, so analysts don't think underlying sales will continue to drop at the rate they have done. And while expecting a surge in good news may be unrealistic, the current share price suggests to us that investors already have very low expectations.

Crucially, the market's opinion seems to be that, although M&S's problems are deep-seated and won't be solved overnight, we don't think they are structural. And with such a high-profile management change on the horizon, we also feel few shareholders will be looking to sell.