M&S isn’t the force it once was.
The company’s stock market value is £2.6 billion. Investors nowadays think the prospects of Next (£7.9 billion), JD Sports (£6.1 billion) and Frasers (£3 billion) burn brighter.
In the last 25 years, M&S’s share of the UK clothing market has halved to just 7%.
The days of empire are long gone, but M&S continues to attract attention disproportion to its financial performance, partly due to nostalgia and partially because it remains a very significant employer.
Today the chief executive, Steve Rowe, signed off after six years in charge. He leaves M&S in demonstrably better shape than it was.
Under Rowe, the retailer has revamped its online operation, overhauled its supply chains and fixed the extraordinary problems at Castle Donington - its central distribution centre tended to seize up during periods of high demand like Christmas.
Net debt has been reduced, and the joint venture with Ocado already looks to be a shrewd move.
M&S has played catch-up on digital and closed shops, shifting away from town centres. Although it is worth noting, the company says it still has more high-street space than it needs.
In addition to resolving profound internal problems, M&S has spent the last year grappling with the challenges all retailers faced: COVID restrictions, Brexit and war in Europe.
M&S trades in 105 markets but has decided to ditch its profitable franchise in Russia, along with its 48 shops and £100m in sales, booking a loss of £31m. The exit is described as "full and complete.”
The company estimates it spent £29.6m dealing with “EU border costs and tariffs” last year, and the new trading rules cost it £15m in sales - the most significant impact being felt in the Republic of Ireland. Net benefit to consumers of the changes: zero.
M&S posted a profit of £391.7 million before tax for the 12 months ending 2nd April 2022. It also warned that the months ahead look difficult as consumers start to feel the impact of high inflation.
If the Bank of England is correct, the UK is entering the biggest squeeze on living standards in living memory.
“The average M&S shopper has a savings cushion,” says Steve Rowe, but he conceded that belts would inevitably tighten.
Global supply chain disruption continues. The market price of cotton, timber and animal feed has soared.
Input cost inflation is running at “high single digits” across the M&S business. “A chunk of it will get passed on,” said Rowe.
Rowe hands over to Stuart Machin and Kate Bickerstaffe (who will be co-CEO but will also report to Machin) at the end of the month.
The chairman, Archie Norman, believes “an inflexion point” has been reached. He talks of “green shoots” and “points of light” and M&S “emerging from the chrysalis of Covid”.
Norman believes that a business, which has been in a perpetual state of turnaround for years, is now facing confidently in the right direction.
A glance at M&S’s share price (133p) suggests investors aren’t quite as ebullient.