Does Rose by another name smell as sweet?

Marks & Spencer (M&S) plastic carrier bag

What short memories they have at Marks & Spencer. The last time the company had an executive chairman the tale ended in tears. Strictly speaking, Sir Richard Greenbury was a combined chairman and chief executive, but Sir Stuart Rose's new role is essentially the same: power is being concentrated in one individual.

Greenbury, the autocrat who had a long and distinguished innings until trading turned sour in the late 1990s, was prised out of the company in painful fashion. The trauma seemed to paralyse M&S executives for years. Arguably, it contributed to the decline that led to Rose's return in 2004 as a back-to-basics chief executive.

Now M&S is also going back to the old boardroom model. Of course, it doesn't put it that way. Rose and Greenbury have different styles, it is argued. Rose, unlike Greenbury, has set a date to depart: July 2011. Those points are true, but they can't obscure a greater similarity: it would now take a boardroom revolution to shift Rose prematurely. It is also hard to imagine even minor boardroom rebellions. What if the non-executives felt M&S, in the face of a tricky UK climate, should slow its expansion overseas? Would they press the point if the executive chairman disagreed? You doubt it.

The argument from M&S is that Rose's departure is the last thing shareholders would want, which is also true. The share price may have halved from its best, but Rose has invigorated the business. Profits this financial year should return to £1bn, or close to it, and M&S has rediscovered its swagger. Investors, by and large, would prefer Rose to extend his stay beyond 2009.

So why wasn't he simply offered an extension to his job of chief executive? The answer is that Rose himself seems to have vetoed the idea. According to the official script, the executive chairmanship will allow Rose to hand over more day-to-day responsibilities to his underlings and so enable M&S to identify a successor. Really? Come on. Rose could surely have orchestrated competition in the ranks while remaining as a conventional chief executive.

The laughable part is that M&S claimed to have consulted its main shareholders. If so, it ignored the view of Legal & General, which made public its unhappiness within hours. We must wait to see if L&G's opposition snowballs into a wider campaign, but it is clear that M&S was living in La-La Land if it expected applause yesterday.

The opponents are not just the usual corporate governance box-tickers. Anger is also felt by fund managers who freely accept that one size doesn't fit all; at M&S, they are simply not convinced that the succession issue is so complex that the traditional balance of power in the boardroom must be upset.

At the moment, it is still odds-on that Rose will get his way. When push comes to shove, most shareholders probably won't risk antagonising him to the point where he might walk away. That still leaves room for a long and bitter row. Quite right too: this move smacks of old-fashioned M&S arrogance.

Home truths

The outlook for 2008 is so poor that we've decided to increase the dividend by 17%. Yes, it's the housebuilding sector giving mixed messages once again.

Bovis Homes was the witness yesterday, and we should probably place greater weight on what chief executive Malcolm Harris said, rather than the decision to honour a previously signalled dividend rise.

"Unless decisive action is taken now to reduce interest rates, and more normal conditions return to the mortgage market, it is likely volumes will be well below those achieved in 2007," said Harris.

It doesn't require genius to see that statement as extremely bearish. An interest rate cut before May is highly unlikely, especially when factory-gate inflation remains at a 16-year high, as the official data indicated yesterday. As for the mortgage market returning to "normal", dream on. Conditions are getting worse, not better. So yes, Bovis, like its peers, is heading for a sharp fall in transactions this year.

How sharp? Well, Bovis is down 20% so far this year. If the peak spring selling season is indeed a wash-out, the rate of decline could easily accelerate. In the circumstances, 12% off the share price was perfectly reasonable.

Naturally, there are also arguments to suggest the shares might find support soon. Bovis carries little debt, its profit margins are still healthy and its official net asset value stands north of the share price. The problem is that buyers of shares, like buyers of houses, are taking the same view: why buy now when there is reason to suppose that prices will get cheaper?

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