Shares in Marks & Spencer have been staging an impressive recovery, having all but doubled in value in little over a year.
Does this herald a genuine new dawn for the retailer, which has been in a state of perpetual turnaround for the past 20 years, or just another false one?
The core problem for chairman Archie Norman and chief executive Steve Rowe is the one in the old joke about the Englishman in Connemara who asked a genial farmer the way to Letterfrack: you wouldn’t start from here.
M&S is making stupendous efforts to pivot away from dowdy stores in the wrong places. It has invested heavily in tech in shops, including till-free shopping and automated click and collect
The food business has performed well and the joint venture with Ocado has got off to a roaring start.
But clothing remains in the doldrums, despite a valiant attempt to pivot online and towards leisure and casual togs.
Some of this is pandemic-related. M&S has traditionally been a destination for good value work and formal wear.
Having conducted numerous Zoom calls with senior executives in polo shirts, it is an open question to me whether anyone is going back into suits.
The retailer is taking a leaf out of Next’s book and hosting brands online, including Finery and Nobody’s Child.
This doesn’t guarantee winning market share from the myriad of competition for the middle-aged fashionista’s purse, nor does it address the bigger issue of how to make clothes shopping in stores more enjoyable.
M&S is making stupendous efforts to pivot away from dowdy stores in the wrong places. It has invested heavily in tech in shops, including till-free shopping for food and automated click and collect, where customers go to a kiosk, type in their name and receive their order in less than a minute.
Rowe has also launched a major initiative called MS2 – let’s hope any similarity to HS2 is purely coincidental – to make stores and online work better together, and to leverage the vast amounts of information it has on customers’ habits and preferences.
Brexit has not helped M&S, which is taking a big hit on food exports in terms of tariffs and administrative costs.
These are likely to come to up to £47million in 2021-22, of which up to £33million relate to the island of Ireland, and they are not teething problems but likely to be a permanent extra expense. In the context of the retailer’s current profits, these are a significant burden.
In an ideal world, M&S would probably be better off only selling food and lingerie. This is impractical: clothing and homewares are often in the same shops and cannot easily be hived off.
Disposing of stores in the current environment – with doubts over the future of the High Street – is not easy.
The overhaul of the store estate, with old ones closing and new ones opening up, will grind on. M&S recently promoted Katie Bickerstaffe and Stuart Machin to joint chief operating officers, setting tongues wagging about succession planning.
Steve Rowe is not ready to go yet, but will he succeed where his predecessors failed? Let’s hope so.
The share rally is heartening, but as long-term holders like myself – I have a small stake – are all too aware, M&S is a long way from the 560p price of a few years ago (and peak over 700p in 2007).
I’d love to see M&S regain its place in the FTSE 100 and at the pinnacle of British retail, but I’m not sure I would put money on it.
The Daily Mail has this week launched campaign to shine a light on the activities of private equity.
Some models of ownership are riskier than others but none are inherently good or bad: it comes down to the behaviour of those in charge.
Mutuality is often heralded as morally superior, yet who could forget the antics of Crystal Methodist Paul Flowers, chairman of the Co-operative Bank?
There are private equity successes that show how well it can work, done properly.
Kurt Geiger, the shoe chain, whose chief executive Neil Clifford we interview today, stands out as a contrast to the damaging private equity takeovers that have scarred our high streets.
The British Venture Capital Association argues that private equity has an important role in supporting the UK economy to build back better after Covid, and to meet the climate change challenges that we all face.
But it will only fulfil that role if it roots out the sharp practice that has given buyout barons a bad name.
The best way to do that is for private equity firms to adopt the Daily Mail’s manifesto for responsible investment.
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