Fresh perils for Marks
MARKS & Spencer, for all its challenges, still retains its status as a Christmas favourite. A near lockdown holiday season saw its sales of smaller twoto-three person basted turkeys soar 35pc and orders for online flowers and hampers in the stratosphere.
The headwinds for the famous old stores group are gale force.
Against a difficult background, the 2.6pc rise in same- store food sales over the 13 weeks to Boxing Day looks fine, and the 24.1pc decline in clothing and homeware tolerable as sales floors have been closed in many parts of the country.
M&S is being buffeted by a High Street store reboot, Covid and new UK- EU trade arrangements.
As at every other enterprise, the pandemic has required some speedy juggling of operations. The biggest commercial decision, the joint venture with Ocado, has proved timely. Similarly, a stronger online presence means that the 46.5pc sharp decline in store sales of clothing and homeware has partly been made up by a surge of 47.5pc on the web. But it is not clear that the older M&S cohort will ever be as comfortable with digital shopping as the customers at rival Next.
It is not just the way that people shop that has changed, but also what they wear. So there has been a sprint into fitness, outdoor and leisure clothing and the bread and butter of quality men’s suits and more formal workwear for women is suffering. That may not be good for margins.
The group is thinking creatively about what it can do better, especially online where totemic names can be helpful.
Hence the recent speculation around buying the Jaeger brand, which still retains some cache despite being hawked around in recent times.
M&S is often less political than some of its rivals. So it is unusual to see chief executive Steve Rowe ramping up the rhetoric around Boris Johnson’s supposed tariff-and-quota free deal. A combination of a lack of attention to detail and French bloody-mindedness is causing all sorts of problems, not least the need for every re-exported item to be listed individually on manifests rather than in batches. None of this is insurmountable but it is costly and time-consuming, which is isn’t great for food products. Doubtless, systems will catch up.
Amid the changing weather, there are no signs of faith in M&S’s widely-held shares picking up yet, with the grand dame’s market value at £2.7bn, just one- seventh of UK partner Ocado at £18bn-plus and one-third of Next. There is an arduous K2style climb ahead.
Rising Sun
WHEN Warren Buffett ploughed $6bn into five of Japan’s biggest trading empires in September, market watchers wondered what the Oracle of Omaha knew that they didn’t. After all, as the Dow Jones and Nasdaq have hit a series of highs over the last several years, the Nikkei has been a serial underperformer.
Now some three decades after Japan embarked on what is often called the lost decade, Tokyo’s share market has finally made up the lost ground with the Nikkei leaping 2.36pc to 28,139.03. All the efforts by successive governments to pull Japan out of stagnation, including negative interest rates, a massive bond buying operation by the Bank of Japan and fiscal stimulus – which saw new bridges built in the most out of the way places – finally appears to have convinced investors that a new era is born.
Paradoxically, the peak was achieved on the day that Japan, which has had a much less traumatic pandemic than G7 partners, declared a state of emergency.
The lockdown, covering the greater Tokyo area, accounting for one-third of output, will see restaurant and bars being asked to close at 8pm but shops still open. Doesn’t look very onerous from here.
Child’s play
THE latest tech firm jumping on the US float boom is California kids gaming platform Roblox, with a potential value of $30bn.
It is described as a big pandemic winner with 164m active users per month. Having never heard of it, I consulted a grandson who tells me it is favoured among sub-teenage kids who are able to chat while makingup and playing established games such as Adopt Me! and Piggy – a zombie apocalypse version of Peppa Pig. Does he use the site? ‘No, because it’s weird.’