Marketing Plan paper
Three articles have been presented to you all highlighting the ‘ailing clothing business of Marks & Spencer (M&S) as the main cause of the recent drop in profits. In terms of M & S’s strategy, Steve Rowe, the Chief Executive said last year that “Last year we outlined a comprehensive plan to build strong foundations for the future. We said we would recover and grow clothing and home, continue with our plans for food growth, remove costs and simplify the business”. Accordingly, Jill McDonald has been hired to turnaround the groups’s ailing clothing business, starting from September, 2017.
As a Marketing Consultant, you have been approached by Jill McDonald to put together a Marketing Plan to ‘recover and grow’ the clothing business of M&S.
Articles on Marks and Spencer(M&S)
1. Marks and Spencer reports slump in profit hurt by clothing sales and cost of new food stores
Josie Cox, Business Editor , The Independent Online , 24th May, 2017.
ms.gifNet debt stood at £1.9bn for the year, down from £2.1bn in 2016 Reuters
High street stalwart Marks and Spencer has reported a more than 60 per cent fall in pre-tax profit in the year to the end of March, hurt by a decline in clothing sales and higher costs from opening new food stores.
Pre-tax profit came in at £176.4m for the year, while sales were broadly steady at £10.6bn. Food revenue was up 4.2 per cent.
Fourth quarter profit was particularly dented by Easter falling later, and therefore outside of the reporting period. Important post-Christmas sales days, meanwhile, fell in the third quarter.
“After reporting a strong Christmas trading period, achieving its first underlying growth in clothing and home sales for nearly two years, Marks and Spencer has failed to maintain this positive momentum into the New Year, with a difficult fourth quarter across all business lines resulting in a significant drop in full year profits,” said Julie Palmer, a partner at consultancy BegbiesTraynor.
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Marks and Spencer appoints former Asda boss Archie Norman as chairman
“With more consumers choosing to purchase both fashion and food online, alongside increased competition in its clothing division from value retailers like H&M and Primark, M&S has a tough balancing act to manage if it is going to attract new shoppers to its stores and sales channels, while being careful not to ostracise its core customer base,” she added.
M&S said that like-for-like sales in its clothing and homeware division fell 5.9 per cent in the fourth quarter, missing Reuters analysts’ average forecast of a 3.3 per cent decline and John Ibbotson, director of the retail consultancy Retail Vision, described the company as a “dysfunctional dichotomy – premium food with dowdy clothing”.
But Steve Rowe, who took over as chief executive a year ago, proved optimistic.
“Last year we outlined a comprehensive plan to build strong foundations for the future. We said we would recover and grow clothing and home, continue with our plans for food growth, remove costs and simplify the business,” he said.
“We achieved a huge amount in the year and whilst there is still much to do, I am pleased with our progress and we remain on track,” he added.
He said that, as anticipated, the planned restructuring of the group had come with a cost that had impacted profits, “but the business is still strongly cash generative and we reduced our net debt”.
Net debt stood at £1.9bn for the year, down from £2.1bn in 2016.
Since announcing the results of a sweeping strategist review last year, M&S has opened 68 new food stores and completed consultation on shop closures in 10 loss-making international markets.
Looking ahead, the group said that the outlook for the overall clothing market remains uncertain and that improvements to style and fit would remain core to its strategy. It also said that it would continue to reduce the number of promotions and clearance sales and maintain its strong focus on food.
2. M&S sales, profit fall after short-lived improvement
Wed May 24, 2017 | 7:44am BST , Reuters
FILE PHOTO: People walk past a branch of British retailer Marks and Spencer in the British overseas territory of Gibraltar, historically claimed by Spain, April 20, 2017. REUTERS/Phil Noble /File Photo
Britain’s Marks & Spencer reported a 10 percent decline in annual profit and said clothing and homeware sales fell in its latest quarter, dampening the euphoria of the previous three months when it recorded a first increase in nearly two years.
The firm also said on Wednesday that the trading environment remained tough.
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M&S, one of the best known names in British retail, made a pretax profit before one off items of 613.8 million pounds in the year to April 1. That was ahead of analysts’ average forecast of 593 million pounds but down from 690 million pounds made in 2015-16. The outcome reflects lower clothing and homeware sales and higher costs.
Revenue fell 2.2 percent to 10.62 billion pounds. However, the dividend was maintained at 18.7 pence.
Steve Rowe, a 27-year company veteran, became CEO a year ago, taking on the tough task of reviving a British institution that has fallen out of fashion over the last decade.
His priority has been trying to turn around M&S’s underperforming clothing business by driving improvements in the quality, fit and availability of its ranges, while lowering prices and reducing the amount of garments sold through promotions.
Rowe is also working through major programmes to switch UK shopfloor space away from clothing and towards food and reduce the group’s international high street exposure, closing stores in 10 markets.
He said last year his plans would dent short-term profit.
“We achieved a huge amount in the year and whilst there is still much to do, I am pleased with our progress and we remain on track,” he said on Wednesday.
M&S’s fourth quarter sales were significantly dented by a later Easter falling outside the quarter and by the key days of the busy post Christmas sale coming in the third, rather than the fourth, quarter.
Clothing and homeware like-for-like sales fell 5.9 percent in the period, worse than analysts’ average forecast of a 3.3 percent decline. They had increased 2.3 percent in the previous quarter.
Like-for-like food sales fell 2.1 percent versus an analysts’ consensus of down 0.6 percent.
For its 2017-18 year M&S said it was targeting a clothing and homeware gross margin in a range of up 25 to down 25 basis points, with the firm seeking to mitigate the impact of a weaker pound with better sourcing and a further reduction in discounting.
Shares in M&S, which have increased 20 percent in the last three months, closed Tuesday at 387.7 pence, valuing the business at 6.32 billion pounds.
(Reporting by James Davey; editing by Kate Holton)
3. Marks and Spencer set to post losses in results this week as clothing division continues to struggle
Sunday 21 May 2017 11:20pm by Lucy White
Marks & Spencer Christmas Sales Expected To Be Disappointing
M&S has had much more success in its food offerings (Source: Getty)
High street stalwart Marks & Spencer is set to report a drop in earnings on Wednesday, as clothing sales take a hit.
After reporting its first underlying growth in clothing and home sales for nearly two years over the festive Christmas period, analysts have predicted that sales in the sector will have tumbled by more than three per cent in the first quarter.
Marks & Spencer’s food business is also expected to post a more moderate loss of around one per cent, while the consensus for underlying pre-tax profits for the year is down 13 per cent at £593m, according to IG.
Consumer expert Shaun Browne, of advisory firm HoulihanLokey, placed the problem at the heart of M&S’s offering. “There’s this underlying dichotomy between the huge clothing business and the reasonable food business,” he said. “The clothes aren’t at the premium end of the market, but the food is.”
Perhaps following a similar line of thought, Rowe’s turnaround plan has so far entailed the closure of 30 “full-line” shops, which sell clothing, homeware and food, while another 45 are to be converted into food-only stores.
M&S has recently announced two heavyweight hires. Ex- Asda head Archie Norman will join as chair in September, while current Halfords chief executive Jill McDonald will attempt to turn around the group’s ailing clothing business.
