It was a few years ago, but I still remember the moment vividly. I had nipped out of the office at lunchtime for a snack at Marks & Spencer and picked up a nice little box of cherries. My mouth was watering, but I nearly choked when I saw the price – £7. Suffice to say I returned them to the shelf and bought an apple.

It was just one symptom of the many things that were wrong with M&S, as we all know it. One in three women may have still gone there for underwear, but that was about all they seemed to be buying.

A brand once synonymous with affordable quality had lost its way. M&S could not cope in the face of tough competition from much cheaper, more fashionable rivals and the rise of online shopping.

But in September 2017 M&S got a new chairman – Archie Norman. I remembered him from his days at Asda, and my ears pricked up. We began tracking the company, joining analyst calls.

It was clear from early on that Norman was no ordinary chairman, there to apply a gentle hand to the tiller occasionally. He happily tells you that when new management arrive they have to do so with a “thunderclap”. He did.

There were big changes among the senior team. One of his best hires was former Top Shop fashion director Maddy Evans, who has transformed the women’s range and is garnering coverage in the feature pages of the national press.

They cut costs, closing unprofitable stores (though they are now selectively opening some again). They shrank product ranges. If I had wandered upstairs to the men’s department that day of the cherry incident I would no doubt have been faced with a bewildering array of trousers that looked virtually identical. What was the point? Rationalising the lines has allowed M&S to increase order sizes, which means the “cost per unit” has fallen – savings passed on to the customer. It has also meant stores are more likely to have the right size for you on the peg.

In the food department the business has focused on providing the basics at competitive prices, which means more people are passing through. And once there they can be tempted with tasty ready meals, which are probably still cheaper than a takeaway but feel like a luxury treat. Affordable quality is back.

When they hear we own M&S shares, friends who would once have been embarrassed to shop there confess they are regulars again – and not just for pants and socks! The share price has nearly doubled this year.

What does that tell you about companies? I think it is a useful reminder that tomorrow’s winners can often be found in yesterday’s losers rediscovering their mojo. Another example of that this year is Rolls-Royce – another holding – up 187% this year (to 6 December 2023), only months after its new boss described it as a “burning platform”.

Companies change. They have no choice. It is remarkable when you look at the FTSE 100 how many of those businesses started out in the 19^th century doing something completely different. But a company like Smiths, which began life making wristwatches for the Admiralty in a time of sailing ships, would not be a multinational giant today if it had not evolved. It now makes airport security equipment!

Change is often a response to challenge and crisis. And management do not always get it right. The market can take a long time to notice when they do. Here lies the opportunity.

Signs of positive change include new management willing to make necessary changes that their predecessors could not or would not. Companies confronting costs and making difficult decisions are worth watching. Sometimes these are palatable only in times of difficulty. We have seen that this year with Yorkshire buildings supplier Marshalls closing a factory in Scotland and trimming around 400 jobs.

Another promising sign is when management focus on what matters most. That can mean selling non-core businesses, as Rolls-Royce has this year. It can mean focusing on delivering affordable quality, as M&S has.

There is always an element of luck at play. We have seen businesses doing the right thing but thwarted by events, like Covid. This is why we diversify.

It is hard to describe the satisfaction I get as a fund manager when I see a recovery plan work at a company I have backed – often to the puzzlement of others. Does life become just a bowl of cherries? It can feel that way, especially now that M&S sells them for just £4.25.

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