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Can Marks & Spencer Regain its Lost Ground?

Can Marks & Spencer Regain its Lost Ground?
Case Code: BSTR550
Case Length: 13 Pages
Period: 2013-2017
Pub Date: 2018
Teaching Note: Available
Price: Rs.300
Organization: Marks and Spencer plc
Industry: Retail
Countries: UK
Themes: Turnaround Strategy
Can Marks & Spencer Regain its Lost Ground?
Abstract Case Intro 1 Case Intro 2 Excerpts

Excerpts

The Downfall

During the 2007-2008 financial crisis , M&S’s business took an enormous hit as the downturn affected consumer spending. The retailer’s first-half year profits were down by more than 30%. M&S had never projected itself as a discount retailer while many of its competitors started reducing prices and margins in an attempt to make it through the slump times. M&S, however, held firm to its premium pricing strategy. In 2008, £5billion was wiped off the company’s share price following a declaration of a fall in profits. It was due to the disastrous Christmas sale in M&S following the collapse of Lehman Brothers Holdings Inc. (Lehman Brothers)...

The Turnaround

M&S announced that it would close 30 UK stores and restrict its foreign expansion to turn around its plummeting business by November 2016 . According to Matthew Hopkinson (Hopkinson), director of retail analyst Local Data Company, 35 towns and cities with multiple M&S stores were most likely to close down the stores. The locations included Birmingham, Bristol, Leeds, and Manchester by 2016. In addition, M&S would close 53 loss making international stores including its flagship store on Champs-Elysees, Paris, and exit 10 markets, as it switched its overseas business to a franchise model....

On the Road to Recovery?

Going forward, Rowe planned to accelerate his turnaround plan as revenue in the first half of 2017 was steady and profits had not slid by as much as expected. In the first half of 2017, revenue was up 2.6% to £5.1 billion and profit before adjusted items dropped 5.3% to £219.1 million. Profit after tax and adjusted items were up 432% to £84.6 million. Meanwhile, M&S reported that clothing and homeware sales had fallen by 1.2 % in the 13 weeks up to July 1, 2017...

Exhibits

Exhibit I: Key Financials of Marks and Spencer Plc
Exhibit II: International Sales of M&S
Exhibit III: M&S Clothing Same Store Sales Growth Percentage
Exhibit IV: Stock Price Chart of M&S
Exhibit V: Financials of Marks and Spencer Plc (2013-2017)*

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