Marks & Spencer (LONDON:MKS) is one of the UK’s more iconic retailers, founded in 1884 it has been one of the cornerstones of the High Street and was one of the first UK retailers to generate a pre-tax profit of over £1bn in 1998.
Those days seem a long time ago now as the company struggled to adapt to the changing face of the retail sector in the UK as fashion tastes and shopping habits evolved in the face of new technology.
Today’s announcement that the company had reported a fall in profits for the third year in a row, dropping below sector peer Next in the process as the largest British retailer, has once again prompted shareholders to ask questions about the pace of the latest turnaround strategy.
It was four years ago this month that new CEO Marc Bolland was tasked with the job of turning Marks and Spencer around into one of the UK’s biggest and best multi-channel retailers at a time when it was coming under increasing pressure from nimbler peers like Next who seemed to have a much broader appeal to a wider demographic, and a better on-line presence.
Four years later shareholders continue to ask themselves when they can look forward to the fruition of this task as the new CEO grapples with an ever competitive retail environment, and the general merchandise division continues to struggle.
The launch of a new website earlier this year was part of this new multi million pound turnaround strategy, but even this has had its problems with customers having to re-register their details, when the site was first launched. Even now the company has said that it will take time for the new site to settle in, and could continue to act as a drag in Q1 performance.
Womenswear under the leadership of Belinda Earl is also showing some signs of improvement with the new spring summer range getting good reviews.
Fortunately for Mr Bolland the food division continues to outperform and would appear to be one of the bright spots that has helped the company beat profit expectations.
Clearly there remains some way to go, with some promising green shoots, but given he has had four years to implement this plan, it can’t be too long before investors really start to lose patience with a man who appears well on his way to become the David Moyes of retailing, and Moyes only got nine months.
Marked out as the chosen one to take the business forward, the high expectations and high salary still remain some way from being justified, and while there are signs that some of the recent investment is starting to bear fruit, shareholders are entitled to ask why it’s taking so long, hence today’s fall in the share price.
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