Marks & Spencer
From Free net encyclopedia
foundation = Leeds (1894) | location = London | key_people = Michael Marks, Founder
Stuart Rose, Chief Executive | industry = Retailer | products = Clothing, food, household items | revenue = Template:Profit £7.71 billion GBP (2005) | num_employees = 70,550 | homepage = www.marksandspencer.com
}}
Marks & Spencer plc (known also as M&S and sometimes colloquially as Marks and Sparks or Marks's) is a British retailer. It is probably the most iconic chain store in the UK and it is the largest clothing retailer in the UK by turnover (ASDA claimed first place by volume in 2004), and it is also a multi-billion pound food retailer. Most of its shops sell both of these categories. It also has a third line of business selling homewares such as bedlinen, but this is far smaller than the other two. For much of the 20th century M&S was regarded as the leading retailer in the United Kingdom, and an icon of British business. In 1997 it became the first British retailer to make a profit before tax of over £1 billion, though within a couple of years it plunged into a crisis from which it has not yet fully recovered. It is now less than one quarter of the size of the UK's largest and most profitable retailer, Tesco.
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History
Image:Marksandspencer.jpg The original firm was a chain of "penny bazaars", founded by Thomas Spencer and a Jewish immigrant, Michael Marks in Leeds. It became a household name thanks to the efforts of Marks' son, Simon Marks, and his friend, Israel Sieff.
Unlike most of its rivals M&S resisted the lure of television advertising when ITV was launched in 1955, preferring to rely on its reputation to draw in customers. It was not until the mid-1990s that the first TV commercials for M&S clothing were broadcast.
M&S made their reputation in the 20th century on a policy of only selling British-made goods. They entered into long term relationships with British manufacturers, and sold the goods under the "St Michael" brand (trademark registered in 1928), which was used for both clothes and food. It also accepted the return of unwanted goods, giving a full cash refund if the receipt was shown no matter how long ago the product was purchased. It has now adopted a 90-day returns policy, controversially failing to properly inform the public, leading to loss of many loyal customers. The company put its main emphasis on quality, but for most of its history, it also had a reputation for offering fair value for money. When this reputation began to waver, it encountered serious difficulties. Arguably, M&S has historically been an iconic retailer of 'British Quality Goods.' It's business model required suppliers to commit to long term contracts solely to M&S. This approach often led to an over reliance by manufacturers on the portion of trade they did with M&S. Accordingly, when the M&S fashion buyers changed suppliers on some aspects of the company's retail clothing offering, manufacturers were left dangerously exposed - many became insolvent. This has resulted in a change of climate and no longer is a contract to supply M&S held up as the panacea it once was. Further, the shift by M&S towards the pursuit of profits, has precipitated a reliance on imported goods. This has often been to the detriment of quality, jeopordising a fundamental mainstay of the enduring M&S ethos.
In 1988, the company acquired Brooks Brothers, an American clothing company and Kings Super Markets, a US food chain.
M&S's profits peaked in 1997 and 1998. At the time it was seen as a continuing success story, but with hindsight it is considered that during Sir Richard Greenbury's tenure as head of the company, profit margins were pushed to untenable levels, and the loyalty of its customers was seriously eroded. The rising cost of using British suppliers was also burden, as rival retailers increasingly imported their goods from low-cost countries, but M&S's belated switch to overseas suppliers undermined a core part of its appeal to the public. In addition, as an ageing and famously bureaucratic company, it was losing touch with potential younger customers, who were reluctant to shop with it. These factors combined to plunge M&S into a sudden slump, which took the company, its shareholders, who included hundreds of thousands of small investors, and nearly all retail analysts and business journalists, by surprise. The company's share price fell by more than two thirds, and its profits fell from more than a billion pounds in 1997 and 1998 to £145 million in the year ended 31 March 2001.
Since the late 1990s M&S has experienced serious boardroom instability and has made a number of attempts to revive its business, with only partial success. In 2001, with changes in their business focus such as the introduction of the "Per Una" clothing range designed by George Davies, accompanied by a redesign of their underlying business model, profits recovered somewhat and M&S recovered some of its market share, but it soon became apparent that problems remained. Other changes to tradition included accepting credit cards and opening their stores on Sunday.
In 2004 M&S was in the throes of an attempted takeover by Arcadia Group & Bhs boss, Philip Green. On July 12 a recovery plan was announced which would involve selling off the financial services business to HSBC Bank plc, buying control of the Per Una range, closing the Gateshead Lifestore and stopping the expansion of its Simply Food line of stores. Philip Green withdrew his takeover bid after failing to get sufficient backing from shareholders.
The headquarters of M&S was for many years in Baker Street, London; during World War II these offices were used by the Special Operations Executive for secret missions in Occupied Europe. In 2005 the company moved to a new headquarters in Paddington, London.
M&S are currently in dispute with frozen ready meal retailer COOK Trading Limited regarding the branding of M&S's COOK! food range. COOK Trading Limited believe that the branding on M&S' COOK! range is confusingly similar to COOK Trading Limited's own 'COOK' range of meals, using a similar typeface and wording on the packaging.
Branding
In the late 1990s, The St Michael brand was discontinued in favour of Marks & Spencer.
Image:YourM&S.gif When Stuart Rose took over in 2004, he introduced a new promotional brand under the Your M&S banner, with a corresponding logo. This has now become the company's main brand in its advertising, online presence and in-store merchandising. The clean font and modern colours of the new image are somewhat incongruous alongside the traditional M&S signage and associated fittings that still adorn the stores themselves. In fact the only thing they have in common is the use of M&S traditional green in the ampersand of the new logo. This may seem confusing at first, but the new look has been instrumental in the company's recent resurgence, particularly with the success of a new clothing campign featuring the legendary model, Twiggy. A number of new look store formats are currently being trialled for possible roll-out in the future.
Chairmen
- 1884-1916: Michael Marks (set up first stall in Leeds in *1884)
- 1916-1964: Simon Marks (Lord Marks)
- 1964-1967: Israel Sieff (Lord Sieff)
- 1967-1972: Edward Sieff
- 1972-1984: Marcus Sieff (Lord Sieff)
- 1984-1991: Derek Rayner (Lord Rayner)
- 1991-1999: Sir Richard Greenbury
- 2000-2004: Luc Vandevelde
- 2004-2005/6: Paul Myners
The Sieffs were members of one of the founding families. When Stuart Rose took charge of the business in 2004 he was appointed Chief Executive but not chairman. Paul Myners was appointed Chairman in 1994: he will finish his tenure at the next AGM, to be replaced by Lord Burns.
Locations
International Locations
Image:M&s.JPG M&S has expanded to 28 countries around the globe. They are mostly present in former British colonies and Eastern Europe; the attempt to expand into Western Europe and the United States failed due to their high prices and the particularly British vision of the company. The expansion into France was particularly unsuccessful, and eventually they were forced to close all their French stores. Because of the legislation set in place by the French government to protect their labour force, this was a costlier exercise than M&S management anticipated. M&S also have a large presence in Ireland.
M&S expanded into Canada in 1973, and at one point had 47 stores across Canada. Despite various efforts to improve its image, the chain was never able to move beyond its reputation in Canada as a stodgy retailer, one that catered primarily to senior citizens. The stores in Canada were smaller than British outlets, and did not carry the same selection. In the late 1990s, further efforts were made to modernize the stores and expand the customer base, and unprofitable locations were closed. Nonetheless, the Canadian operations continued to lose money, and the last 38 stores in Canada were closed in 1999.
The first M&S store in central Asia was built in Kabul, Afghanistan in the 1960s. The store was later shut down as the mood of the city turned conservative.
The company presently does around 75% of its business in Britain.
Financial performance
Until 1999, M&S's financial year ended on 31 March. Since then, the company has changed to reporting for 52 or 53 week periods, ending on variable dates.
| Year ended | Turnover (£ M) | Profit before tax (£ M) | Net profit (£ M) | Basic eps (p) |
|---|---|---|---|---|
| 2 Apr 2005 | 7,942.3 | 745.3 | 587.0 | 29.1 |
| 3 Apr 2004 | 8,301.5 | 781.6 | 552.3 | 24.2 |
| 29 Mar 2003 | 8,019.1 | 677.5 | 480.5 | 20.7 |
| 30 Mar 2002 | 8,135.4 | 335.9 | 153 | 5.4 |
| 31 Mar 2001 | 8,075.7 | 145.5 | 0.0 | |
| 1 Apr 2000 | 8,195.5 | 417.5 | 258.7 | 9.0 |
| 31 Mar 1999 | 8,224.0 | 546.1 | 372.1 | 13.0 |
| 31 Mar 1998 | 8,243.3 | 1,155.0 | 815.9 | 28.6 |
| 31 Mar 1997 | 7,841.9 | 1,102.1 | 746.6 | 26.7 |
| 31 Mar 1996 | 7,233.7 | 965.8 | 652.6 | 23.3 |
Marks & Spencer Financial Services was sold during the group's 2004-05 financial year and the turnover figure includes turnover from discontinued operations of £232.0 million. There were other exceptional items in the year, principally restructuring costs of £91.4 million. Profit on ordinary activities before tax and exceptional items was £618.5 down 23.2% from £805.0 million the previous year.