Marks & Spencer is celebrating its 125th birthday this year, marking “a very long life for a retailer”, said Rachel Sanderson on Breakingviews. Celebrations, however, “should be muted”. Nearly every figure “is pointing in the wrong direction”, said Elizabeth Rigby in the FT. Pre-tax profits in the past year fell by 40% to around £600m as like-for-like sales slid by 5.9%.
Price cuts have dented margins, but not enough to “stop the rot”: the group’s share of the womenswear, menswear and food markets has fallen. Margins are in for another pounding next year as sterling’s fall against the dollar feeds through to costs. The tough outlook has prompted M&S to cut the dividend for the first time since 2000. That may well be “common sense”, as chief executive Stuart Rose said, but shareholders are entitled to feel “uncommonly annoyed”, said Nils Pratley in The Guardian. M&S has spent over half a billion pounds on buying back shares over the past two years – at an average share price around a third higher than it is now.
Marks & Spencer: the core problem
Rose doesn’t seem to have found a solution to M&S’s “central structural problem”, said Sanderson: the uncomfortable mix of “premium-priced food and mid-to-downmarket clothes”. While the food business has come under pressure in the downturn, there are now plenty of high-street rivals offering the “high-quality but mass-market attire” that made M&S’s name, as Jeremy Warner pointed out in The Independent. It’s still not clear how M&S is relevant “to the modern world”.
MKS: 300p; 12m change -25%