Investors largely welcomed the signs of progress at Marks & Spencer under new boss Steve Rowe yesterday, but this morning’s headlines do not make pleasant reading for the high street stalwart.
The 64% plunge in pre-tax profits is the focus of The Financial Times (£) “M&S profits drop sharply on revamp costs and lower clothing sales”, The Times (£) “Marks & Spencer sees profits drop by 64%”, The Telegraph “Marks & Spencer pre-tax profits tumble 64%” and The Guardian “M&S profits dive by nearly two-thirds as clothing sales slide”. Only the headline at The Daily Mail is slightly more upbeat, writing “Profits plummet at Marks & Spencer but boss Steve Rowe wins backers with food-only store openings”.
Even then Alex Brummer in The Daily Mail worries: “It comes as no surprise that Rowe has prioritised food… But the big bucks are made in clothing and homeware, which have generous margins. The difficulty is that for the second generation of top management in succession, M&S is without its own rag trade executive at the very top.” (The Daily Mail)
The Guardian’s Nils Pratley writes: “The big doubt in the City, however, is whether Rowe is being bold enough in his plan to close 10% of the floorspace devoted to clothing and homewares. The programme would be radical in one swoop, but this is a five-year goal. In the age of internet shopping, the obvious danger is that market shifts faster than M&S intends to run in clothing.” (The Guardian)
James Quinn in The Telegraph says “the high street doyenne’s full-year numbers truly disappoint”, but he suggests Despite the negative numbers, Steve Rowe is on the cusp of a possible renaissance at Marks & Spencer. (The Telegraph £)
All Marks & Spencer can confidently say about its proposed online food delivery service is that the trial later this year will be “very, very, very, very small”. Heavily underplaying what could potentially be a gamechanger for its successful food business, Rowe did not even disclose which stores will be involved in the test or when exactly it will run as he claimed he did not want to “corrupt the trial”. (The Times £)
The FT’s Lombard column says the “retailer’s results give little sign of whether its clothing strategy is working”. It writes: “They cite “early evidence” of success in reducing promotions and clearance sales, but disclose little of it” (The Financial Times £).
Elsewhere, one of the co-founders of Fevertree Drinks is to sell a £40 million tranche of shares in the posh tonic maker. (The Times £)
The remarkable rise of Fevertree, the posh mixers group, appears to have caught Coca-Cola’s Schweppes tonic team asleep at the wheel. Yet others are fighting back. Sekforde Drinks, has a new premium mixer — not tonic — made from a blend of botanicals aimed specifically to go with gin. Meanwhile, Britvic has dusted off an old brand called the London Essence Company and launched a collection of four tonics aimed directly at the Fevertree jugular. (The Times £)
Gerald Corbett, the long-time chairman of Tango maker Britvic, is to step down from the company’s board as it reports improving figures across its brands. (The Telegraph)
The Fairtrade Foundation has hit out at Sainsbury’s over its plans to withdraw the Fairtrade guarantee from some of its own-brand tea ranges. (Sky News)
Floating its Brazilian unit will not fix structural issues in France for Carrefour. (The Financial Times £)
Retail tycoon Sir Philip Green is to mount a rescue bid for the Australian arm of Topshop, after the fashion chain’s local franchise partner slipped into insolvency (The Financial Times £). Meanwhile, Lord Grabiner is to step down as chairman of Taveta Investments, the vehicle behind Sir Philip Green’s retail empire, in the latest high-profile departure from the group (The Times £).