Leading article: Pride comes before a fall in profits

MARKS & SPENCER was once a compulsory part of middle-class existence in Britain, as essential as homework and table napkins. It was more than a shop, it was a way of respectable life. It had a commercial reputation without parallel, built on committed staff, rigorously policed suppliers and good management. It expanded into North America, into Europe, and into financial services. It was a small investors' favourite, and they were well rewarded - until last week, when the company issued its first- ever profit warning and pounds 1.5bn was wiped from its value on the stock market. Marks & Spencer had grown complacent - probably partly because it had managed so well to keep up with the early phase of the Eighties' retailing revolution. And this week it revealed the cost: sales and profits looking very unhealthy.

We should not worry that M&S's profit warning is an indicator that the high street is going into recession. Other retailers are still doing well. Indeed, we should celebrate the fact that the market is working efficiently to punish arrogance. Sainsbury's suffered similarly a few years ago, and is now beginning to turn its business round. It is a good thing that consumers have become more fickle, because unthinking brand loyalty is what allows management to become complacent. Managements that take their position for granted, or indulge in boardroom squabbles, will find that a dowdy player such as Tesco has overtaken them. The fact that Marks & Spencer is a mighty name, a huge force, is nothing to take comfort in. So, once upon a time, was Woolworths.

The signs are that the diminishing power of the brands will lead to more volatility for companies, but the humbling of M&S is good news for the consumer.