HUMBLING OF A HIGH ST GIANT
Today, M&S is set to fall out of the FTSE 100. What a crushing indignity for the store middle Britain once held to its heart. So where DID it all go wrong?
When I was a child, Redcar was a bustling, working-class seaside town.
Along with hundreds of other of Teessiders, my family would regularly drive the few miles there in our Morris Minor. On sunny days, we’d brave the north Sea for a swim or, if the weather was less kind, take a blustery walk round the amusements and shops.
And in pride of place on the high Street was Marks & Spencer — there, as in so many similar locales, a badge of pride and aspiration.
But M&S abandoned the town in 2014, after 76 years. It was a melancholy day when the Redcar store shut its doors for the last time.
As we now know, there were plenty more difficult days to come for the once-mighty retailer — and yesterday was, undoubtedly, one of the worst in its 135-year history.
In a turn of events once unimaginable, M&S is set to be ejected from the FTSe 100 after its market value sank to just £3.7billion — below that needed to retain its place. Chairman Archie norman made light of the prospect of the indignity, saying the ‘sky won’t fall in’, but there is no doubting the disappointment it represents.
A place in the 100 is an insignia of prestige, sought after by firms around the world.
Richard hyman, an independent retail expert, says: ‘Symbolically, falling out of the FTSe is just another milestone in the slow-butsteady decline of what used to be a great British institution.’
Marks & Spencer, which began life as a stall in Leeds Market in 1884, was once considered a superreliable investment, but its recent
performance has been terrible as it has been hit by mounting costs, fierce competition and the relentless rise of online shopping.
Shares have plunged by 36 per cent in the past 12 months and are down around 70 per cent from their high point in 2007.
And M&S is a diminished presence in the real world as well as in the City. A hundred stores deemed not to have a profitable future have been earmarked for closure — many have already closed.
Admittedly, this is out of 1,000 outlets, including 100 in Scotland, so M&S, which employs almost 80,000 staff, won’t be vanishing from our high Streets altogether. But that is scant consolation for loyal customers and to the towns where it once held sway.
In the north east of england, Redcar is just one of the casualties. The branches in Stockton-onTees and Darlington town centre closed last year. And it’s not just in places that are suffering economically. M&S in Durham shut in 2018, and its stores are boarded up in Putney and Fulham in London.
even in its straitened circumstances, M&S acts as a magnet for other retailers. There are wellfounded fears that its departure will lead to a middle-class exodus, leaving desolate high Streets full of kebab joints, charity and coffee shops and betting chains.
As for the stock market relegation, it is desperate news for around 150,000 small shareholders. And it is no exaggeration to say we all feel we own a piece of the business. M&S is part of the fabric of the nation and its exit from the FTSe 100 will be symbolic not only of its corporate decline, but also of our changing culture.
The companies being promoted include hikma, a pharmaceuticals group founded in Jordan, and Polymetal, a Russian mining outfit. Of course, it’s good that overseas firms want to list their shares here, but how sad they take precedence over Marks & Spencer.
The truth, however, is that it was only a matter of time. Some problems are unavoidable — such as having to stump up around £97million in corporation tax for 2018/19 and £184 million in business rates, millions more than online rivals such as Amazon. But many of its miseries are of its own making.
The rot set in during the reign of the late Sir Richard Greenbury between 1988-1999. he achieved stellar results but this created an assumption of smug superiority.
In 1998, M&S was the most successful retailer in the land with
more than £1 billion profit. Yet that same year, the seeds of its decline were being planted with the advent of Amazon and cheap and convenient internet goods. At the same time, Zara, H&M, Jigsaw and Next, began to lure away female customers with good-value high fashion.
Yet at M&S’s London headquarters, bosses seemed oblivious.
Then, as realisation slowly dawned, there followed a parade of well-remunerated leaders and endless attempts to revamp women’s fashion with models from Twiggy to Rosie Huntington-Whiteley. The ubiquitous Holly Willoughby is the latest corporate clothes-horse.
Yet the clothes fail to capture the imagination, while the website is dull and lacks allure. Even M&S food, the star performer, has hit the buffers as we turn to cheaper alternatives offered by discount stores such as Aldi and Lidl.
All may not be lost, though. Archie Norman has embarked on a bold plan to restore the company’s fortunes — the boldest to date. He has signed up for a £750 million share in a venture with Ocado to deliver M&S food to internet customers south of the Border. Norman has a reputation as a formidable company doctor, but can he succeed where all the others failed?
M&S does still have one priceless asset: the affection of the British public. If goodwill and nostalgia were enough, it would be at the top of the FTSE 100 leader board.
Unfortunately, in today’s ruthless retail environment, it takes a lot more than that.