MONITOR: MARKS & SPENCER
Saturday 22 May 1999
retailer's profits have fallen sharply
THE INHERENT danger of great success makes the troubles of M&S wholly predictable. The only real surprise is that its record of success lasted so long. We may also reflect that we can be glad to live in an economic system which positively thrives on the constant rise and fall of different companies. The maiden aunt of the High Street may yet recover herself and learn from her mistakes. Most people would welcome that. But it is a virtue of capitalism that as individual companies rise and fall (and sometimes rise again), the consumer gains all the time.
AFTER ITS expansionary binge, M&S is suffering a monumental hangover. The rash of store openings has left M&S looking over-extended. And its return on capital is down from 22 per cent three years ago. Rebuilding investors' confidence was always going to be difficult. But M&S has made a fair start. Long overdue reforms are being embraced with encouraging vigour. More attention is being paid to merchandising and what customers want. Given an under-leveraged balance sheet and its low return on capital, M&S should consider returning surplus capital to shareholders. With shares still on a market rating, M&S is hardly cheap. But there should be an upside from here on.
MARKS & SPENCER'S problem is that it is a very old-fashioned sort of company, which found a winning formula decades ago and failed to see the world changing round about it. It is a company where "head office knows best". That approach has worked for Coca-Cola and McDonald's. But the fashion business can require a more nimble style.
Robin Thicke admits he didn't write 'Blurred Lines'music
Review: Cilla, ITV TV
To mark Tolstoy's 186th birthdaybooks
Arts & Ents blogs
- 1 Scottish independence: Ireland since 1919 is a lesson for Scotland in what a Yes vote means
- 2 A bottle of wine a day is not bad for you and abstaining is worse than drinking, scientist claims
- 3 Grandmas keep accidentally tagging themselves as Grandmaster Flash on Facebook
- 4 Daniele Watts: Django Unchained actress detained by Los Angeles police after being mistaken for a prostitute
- 5 Kanye West halts concert after two fans don't stand up - doesn't realise one is in wheelchair and the other disabled
Fifty Shades of Grey movie: New picture of Anastasia Steele unveiled
Star Trek 3 to begin shooting in next six months
Lego breaks out of the toy box and heads for the gallery
The Walking Dead season 5 air date, trailer and season 4 recap
Robin Thicke’s hit 'Blurred Lines' lands him in court, and he had 'almost no part' in writing it
Daniele Watts: Django Unchained actress detained by Los Angeles police after being mistaken for a prostitute
The political class is doing what Hitler couldn’t – destroying Britain
Scottish independence: Nationalist leader Jim Sillars threatens pro-union companies with 'day of reckoning' after independence
Scottish independence: Yes campaign feels the heat as Alex Salmond's NHS claims come under furious attack
Portuguese academic says British are 'filthy, violent and drunk'
£23m Birmingham cycle scheme is attacked by Tory councillor for not catering to the elderly