Essay Sample: Financial Performance and Position of Marks and Spencer plc (M&S) in the UK Retail Industry

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1.1 Marks and Spencer (M &S)

mark and spencer logo on the doorMarks & Spencer is one of the UK’s leading retailers of clothing, foods, homeware and financial services, serving 15 million customers a week in over 450 UK stores and employ 65000 people. The Group has a turnover in excess of £8 thousand million,
providing nearly 13.1 million square feet of selling space in UK. M&S have growing business in food, home, furnishing, gifts, beauty and financial services. Until late 2002, M&S had an international distribution of stores; in addition, the Company has 150 stores worldwide, including over 130 franchise businesses, operating in 27 countries. The international business of M&S international business is supported by 30 franchise partners worldwide. (AZARA website). By December 2002, the company decided to concentrate on the UK market and try to consolidate her position as one of the best British retailer.

In 2004, underperformance and hostile takeover bid lead to change for M&S. Since then the company had made progress in the right direction, increased market share, introduced new products like “Autograh” range for men and womenware had been introduced. The effective use of advertising campaign like “your M&S” has generally led to increase in the sale of product range appeared in the ads but has also led to the repositioning of the Marks and Spencer. The new repositioning strategy is aimed at establishing M&S brand and also to target young shoppers with their new fashionable product lines.

2.0 Financial Performance
Marks and Spencer had showed resilience and turnaround from the days of hostile take over from Philip green, a business tycoon. Management of M&S has rewarded the shareholders for their trust by putting the hard work and turning round the fortunes of the company.

The latest financial figures from 2006 showed the recovery in M&S revenue, which is gone up by 4% from £7.5 billion in 2005 to 7.8 billion in 2006. The group operating profit has gone up by 31.84% form £649.1m in 2005 to £855.8m in 2006. The figures clearly indicate that M&S has efficiently managed their business and kept the cost down. The group profit before tax has risen by 35.11% to £751.4m in 2006 from £556.1m in 2005. The confidence in company’s performance and future is indicated by the increase in number of shareholdings by chairman, Paul Myners and CEO Sturat Rose. Paul Myners had shareholding of 228,741 (23 May 2006), which was at 50,606 ordinary shares as at 2 April 2005. Sturat Rose shareholding was 350,416 as at 2 April 2005, which went up to 500,416 as at 1April 2006. The share price of M&S generally had an upward trend since May 2005 (Please see Appendix A).

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