|Bid||0.0000 x 0|
|Ask||0.0000 x 0|
|Day's Range||1.1300 - 1.2050|
|52 Week Range||0.8600 - 2.9300|
|Beta (5Y Monthly)||N/A|
|PE Ratio (TTM)||47.08|
|Forward Dividend & Yield||N/A (N/A)|
|Ex-Dividend Date||Nov 14, 2019|
|1y Target Est||N/A|
Marks & Spencer stock surged on Wednesday despite tumbling profits, as the retailer unveiled a £1 billion coronavirus action plan.
Marks & Spencer is to speed up turnaround plans. That after the UK retailer reported a 21 percent fall in profits. When the global virus crisis hit, the firm was in the middle of its latest attempt at reinvention. It’s already seen more than a decade of failed revivals. On Wednesday (May 20) it said its ‘never the same again’ program would learn lessons from the crisis. The accelerated plan includes a renewed focus on online, through its partnership with Ocado. M&S aims to make its food supply chain more efficient, revamp its clothing business, and speed up the reshaping of its store estate. Chief executive Steve Rowe says the firm has to adapt, with the pandemic changing work and shopping practices for good. The company expects the impact of the crisis to last through the financial year, with demand likely to be weak even after that. In the year to March it made a pretax profit of 403 million pounds, or just over 490 million dollars. M&S shares jumped over 8% following Wednesday's news.
British retailer Marks & Spencer said the coronavirus crisis would indelibly change its business and that it would accelerate its turnaround, as the high street stalwart seeks to reinvent itself anew after a decade of failed revivals. CEO Steve Rowe said it would speed up those measures under a programme it labelled "never the same again".
Zarchi Lwin pawned her only two gold bangles for $140 when the owner of the Myanmar factory where she sewed winter coats for British retailer Next Plc shut it down after orders dried up due to the coronavirus. "If I have a job and an income, I can pay for medical treatment for my mother," Zarchi Lwin, 29, told Reuters from the home she shares with her 56-year-old mother, who has lung disease, in a shanty town on the outskirts of Yangon. KGG, the factory where Zarchi Lwin worked, did not respond to requests for comment.
TransPerfect, the world's largest provider of language and technology solutions for global business, today announced that Marks and Spencer (M&S;) has selected and implemented GlobalLink® technology to manage its multilingual content and automate key processes in the translation workflow for their website. M&S; is a major British multinational retailer that specializes in selling clothing, home goods, and food products. With its headquarters in London, M&S; is listed on the London Stock Exchange (LON:MKS) and is part of the FTSE 250 Index. The retailer was founded in 1884 and currently has 959 stores across the UK.
(Bloomberg Opinion) -- When research firm GlobalData surveyed Americans on which stores they were most looking forward to visiting once the Covid-19 pandemic subsided, one household name came out near the bottom, and well below its department-store peers: J.C. Penney. That helps to explain Friday’s late news that the retailer — which began life in 1902 as a store called The Golden Rule — filed for bankruptcy protection. Pushed to the brink by the coronavirus shutdowns, J.C. Penney Co. was seemingly left with no other choice. But years of struggle and strategic missteps had laid the groundwork.After securing $900 million of financing, J.C. Penney will stay open for now, and its next steps include closing some stores, cutting its debt by several billion dollars and looking at alternatives including a sale. Despite those planned survival efforts, it’s hard to see J.C. Penney having a vibrant future.Even before the coronavirus crisis, the retailer, with just under 850 stores in the U.S. and Puerto Rico, had battled to be relevant to shoppers. Changing consumer tastes and incursions from online sellers wreaked havoc on its sales. And so now, unlike in the case of luxury department-store chain Neiman Marcus Group Inc., which also filed for bankruptcy this month, there may be little for a potential acquirer to pick up.The downfall of J.C. Penney — a chain that grew out of a single store opened 118 years ago in Kemmerer, Wyoming by James Cash Penney — is part and parcel with the long, slow decline of the department store. The concept had its heyday from the end of the Second World War through to the 1980s. Often starting life downtown as Americans moved to the suburbs, these venerable names followed, opening in newly built malls. They focused largely on clothing and the items needed to furnish the homes that Americans were buying. Amid the age of mass car ownership, they were more than happy to drive to these retail attractions.For many years, J.C. Penney was known as a family department store. If not somewhere Americans aspired to shop, it offered good value, and solid styles. In fact, it was a bit like Britain’s Marks & Spencer Group Plc, the sort of place you went for back-to-school gear and basics. But at least M&S sold food — because by the 1980s, the environment for department stores was already darkening. In 1988, Walmart opened its first super-center, adding groceries to its non-food selection to encourage more regular visits. At the same time Target Inc., another mass merchant that combined clothing, home furnishings and groceries, was quietly expanding across the U.S.The mid-market, which J.C. Penney had traditionally occupied, was under attack, not just from discounters, but later the internet, which was rapidly displacing department stores as the one-stop shop, and with cheaper, more transparent pricing.By 2011, in an effort to reinvent itself, J.C. Penney appointed Ron Johnson, an executive from Apple Inc. who built the tech giant’s much-admired retail network. Some of his ideas – a communal space in stores for yoga classes and coffee bars and food stands dotted throughout – were directionally right, even if they never got off the ground. Other concepts did come to fruition and were disastrous, such as ditching the coupons that had driven much of J.C. Penney’s traffic.When Johnson was ousted in 2013, the company apologized to customers in a television commercial: “We learned a very simple thing – to listen to you,” it said in the ad. “Come back to J.C. Penney.” Unfortunately, they never did to the same extent.While subsequent leaders Marvin Ellison, now chief executive of home-improvement chain Lowe’s Cos Inc., and current CEO Jill Soltau made progress, the company has yet to regain its stride. It has grappled with messy stores, and a lower proportion of online sales — around 20% — compared with 26% at Macy’s and 33% at Nordstrom.Most recently, Soltau had cut discounting and reduced the amount of stock the chain carries. She also ditched the electrical appliances that Ellison introduced and sought to strengthen Penney’s core clothing offering. But her efforts, however valiant, were no match for weeks of stores being closed. The group was also burdened with net debt of $4.5 billion, including store lease liabilities of just under 8 times Ebitda as of Feb. 1. Penney said late Friday that it owed creditors $8 billion.With the company less constricted by debt, it may be possible for Soltau to turbocharge her recovery plan, which already includes rejuvenating locations. A store in Hurst, Texas shows the way, with a much-improved layout as well as styling, cafes, a fitness center and a barber shop. Soltau insists it’s not a prototype, but with more investment freedom she may be able to inject elements into other stores. She also had already begun to pare back J.C. Penney’s store base. More locations will close, in phases. Stacey Widlitz of SW Retail Advisors estimates J.C. Penney’s footprint could shrink to just 150 stores. Even so, it’s hard to see how the retailer can stave off dwindling mall traffic if nervous shoppers stay home. Distinguishing itself from other mid-market rivals such as Macy’s Inc., which has its own plans for reinvention, will be another challenge.A financial restructuring isn’t a panacea. For retailers to make it through such a process and flourish, there must be a revival of the operating business, too. It’s far from clear whether J.C. Penney — or any new owner — can pull that off. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
British retailer Marks & Spencer launched a clothing sale on Thursday to help clear stock built up in the coronavirus lockdown, tapping into widespread public support for health workers by giving some proceeds to NHS charities. With Britain having been in lockdown since March 23, the country's store-based clothing retailers are sitting on hundreds of millions of pounds of spring and summer stock, which they are now looking to unload as the restrictions start to ease. M&S, Britain's biggest clothing retailer by sales, said it will donate 10% of the customer purchase price, excluding VAT sales tax, of all sale items to NHS Charities Together, with whom the retailer has an exclusive arrangement.
(Bloomberg) -- U.K. retail sales dropped in April by the most in at least a quarter of a century, according to industry figures that outline the impact of the shutdown on stores.The British Retail Consortium said total sales fell 19.1% in April from a year earlier, the most since its monitor began in 1995. In a further sign of the damage done by the lockdown, a Barclaycard measure of consumer spending fell 36.5% last month.On the consortium’s like-for-like measure, which excludes temporarily closed stores, sales were up 5.7% in April. But most of that growth came from online shopping, which surged almost 60%.Online demand was driven by entertainment products and home-related goods, with computing equipment, household gadgets, toys and baby equipment performing strongly, according to the report. Clothing experienced a significant decline.Figures due later on Wednesday are forecast to show the U.K. economy shrank in the first quarter, reflecting the imposition of virus-related restrictions. The slump is likely to deepen this quarter, and the government is extending aid programs to help support workers and businesses.All British retailers have been affected by the lockdown. Even grocers and other shops deemed essential that have been allowed to continue operating have had to absorb higher costs as they implement social distancing and other measures.Under PressurePrimark, the value clothing chain owned by Associated British Foods Plc, has said the closure of all its shops is costing 650 million pounds ($800 million) of lost revenue a month. Marks & Spencer Group Plc has cut its dividend to preserve cash and weather the crisis. Next Plc reported a 41% plunge in full-price sales in the quarter ended April 25 and said business would remain under pressure for the rest of the year.Nearly all retailers have withdrawn financial guidance for the year.The lockdown has been “catastrophic” for retailers, the consultancy group BDO LLP said last week, adding that even the strongest online sales ever wouldn’t be able to offset the impact. Consumer behavior has changed drastically during lockdown, and retailers will need to adapt as they start to reopen, according to Sophie Michael, head of retail and wholesale at BDO.“With such a significant amount of spend removed, retailers will be focusing on preserving cash, engaging their customers through online channels, and building operational efficiency,” Michael said.(Updates with detail on retailers starting in sixth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Lenders are giving U.K. retailers some breathing room amid the coronavirus outbreak, but the stores’ struggles are unlikely to end as soon as the lockdown lifts.Next Plc, Marks & Spencer Plc and Associated British Foods Plc, owner of Primark, have all managed to waive covenants on their debt in recent weeks, ensuring lenders won’t demand repayment if terms aren’t met. Other retailers, including Matalan, are in talks to obtain more funding.Creditors to the U.K. high street have a difficult decision on their hands. Refusing help to retailers during the lockdown may trigger their collapse, leading to thousands of job losses. But many retailers were already in trouble before the onset of the coronavirus as customers moved toward on-line shopping.“I don’t think lenders have a choice really,” said Olivier Monnoyeur, a portfolio manager at BNP Paribas Asset Management, which oversees more than 400 billion euros ($438 billion) of assets. “You want to give a covenant holiday to the retailer and let the storm pass, and then eventually figure out later who the winners and losers are.”M&S declined to comment for this article and pointed to a previous statement about its move to secure liquidity. A Next spokesman highlighted its Q1 trading statement which emphasized that the company can “operate comfortably within its cash resources.”An ABF spokesperson wrote that the company is “confident it has the financial headroom to meet the challenges ahead.” Matalan declined to comment.In recent weeks the list of troubled retailers filing for administration has grown to include fashion chains Laura Ashley, Oasis and Warehouse, as well as department store Debenhams.“You have to be pretty brave to be invested in non-food retail right now,” Monnoyeur said, adding that the high-yield team at the asset manager is “very cautious” on the sector.Lifting LockdownLenders and retailers are both focusing on when the lockdown will lift and how. Prime Minister Boris Johnson is expected to set out a plan for how businesses and schools will re-open this week.But retailers do not expect demand to snap back when stores do reopen, as shoppers fear exposure to the virus. More than a quarter of consumers surveyed by Retail Economics said that the coronavirus would have a “permanent impact” on the way they shop.Among the developments last week, M&S said it managed to relax covenants on its 1.1 billion pound revolving credit facility and Next’s banks agreed to waive debt tests until January. ABF gained the same reprieve for its debt covenants in February.Sofa-retailer DFS Furniture Plc agreed a new 12-month bank facility of 70 million pounds last month and in the meantime, terms on its debt will fall away. DFS declined to comment for this article but highlighted a previous press release noting its “financial resilience”.“There is an onus on lenders to be as lenient as possible,” said Neill Keaney, an analyst at CreditSights in London. “There does seem to be a willingness not to push a business over, certainly from the bank lending point of view.”The U.K. government and financial regulators have urged banks to keep lending to companies and to be lenient when it comes to potential covenant breaches. But many stores are still struggling to access state-run loan programs.“Lenders are generally being reasonable with the larger Plcs who have a plan for surviving and exiting the crisis,” said Charles Allen, a retail analyst at Bloomberg Intelligence. Some smaller retailers, on the other hand, have not been extended credit, he said.Landlords are also feeling the pain as many retailers seek rent holidays to ride out the lockdown. The coronavirus outbreak will trigger as much as 10 billion pounds of losses and write-offs on loans tied to U.K. stores and malls, according to a survey of lenders by Cass Business School last month.And while the retailers themselves may keep their heads above water with VAT deferrals as well as holidays from rent and business rates, those temporary respites will all add to their overall debt pile.Many people have a vested interest in keeping troubled firms going because pulling the plug would expose their own “deficiencies in judgment”, according to Richard Hyman, an independent retail consultant.“It’s much easier and seductive to think we’ll put a bit more money in and kick the can down the road,” he said.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The retailer said on Tuesday that its planning was based on it enduring subdued trading for the rest of this year in its clothing and home business, as it warned that its food division had been impacted by fewer people travelling into city centres. M&S said that it had significant undrawn credit available for the next 18 months to deal with worst case scenarios on trading. The retailer said it did not anticipate paying a dividend for the 2020-21 financial year, saving it 210 million pounds of cash.
French supermarket retailer Carrefour and Uber Eats announced a new delivery service on Wednesday, aimed at helping Parisians buy essential goods and food during the nationwide lockdown triggered by the coronavirus crisis. The service, which will start on April 6, will allow users to choose a Carrefour convenience store on the Uber Eats app or website, or dial by phone from 11am to 11pm to order the products of their choice, including everyday grocery shopping as well as hygiene and cleaning products. Customers will also be able to get deliveries at home within 30 minutes on average by a delivery person using the Uber Eats application and complying with health and safety guidelines laid out by the French government.
(Bloomberg Opinion) -- As fashion retailers shutter their storefronts across Europe and North America due to the coronavirus, some of the world's most vulnerable workers are feeling the pain — and getting shafted.In Bangladesh, garment factories have already furloughed more than 1 million workers thanks to at least $3 billion in canceled and postponed orders. Elsewhere in Southeast Asia, a key hub for apparel production, the toll is multiplying as quickly as the virus is spreading. If left unaddressed, the crisis could endanger the lives and livelihoods of millions more of the region’s workers.For decades, the apparel industry has had something of a devil’s bargain in Southeast Asia. Western companies have accepted the reputational risk that comes with capitalizing on the region’s low-wage labor, while local governments have tolerated poor factory conditions in return for jobs and growth. In some respects, the benefits have been undeniable: Last year, Bangladesh's apparel industry generated $35 billion in revenue, accounting for 80% of all export earnings, and employed 4.4 million people.In 2013, however, the human costs of this bargain became plain when Rana Plaza, a complex of garment factories near Dhaka, collapsed and killed at least 1,132 workers. The retailers and brands that had outsourced their production to the region looked for ways to prevent a recurrence while ensuring that outsourcing — and Bangladesh's most important export — could be sustained.The next year, they hit on a solution: independent monitoring and inspection organizations, empowered for five-year terms, with buy-in from government and local businesses. Over the next few years, these watchdogs inspected thousands of factories, shut down those that were in violation of safety standards, and pushed often expensive improvements — everything from installing fire alarms to improving building foundations — on others.Even under ideal conditions, however, this solution was only provisional. Earlier this month, the U.S. Senate Foreign Relations Committee released a report documenting backsliding on labor rights in Bangladesh and elsewhere. But the disruption caused by the new coronavirus could prove to be a tipping point.So far, it’s come in two waves.The first started in February. China supplies the overwhelming majority of raw materials for Southeast Asia's garment makers (60% in the case of Vietnam). As Chinese textile producers shuttered, manufacturers in neighboring countries seized up. In Cambodia, the government recently predicted that 200 garment factories, employing 160,000 workers, could soon face raw-material shortages. Already, 10,000 Cambodian workers have been laid off, and some factory owners are reportedly taking advantage of the crisis to push out unionized employees. Safety standards will likely follow them out the factory doors.The second wave of trouble is just starting. In recent weeks, companies including Irish retailer Primark Ltd., Britain's Marks & Spencer Group Plc and Minneapolis-based Target Corp. have canceled, postponed or declared force majeure on orders for which their Southeast Asian partners have already purchased raw materials, and in some cases even completed work.The situation is so serious that Cambodia and India have made direct appeals to global brands to avoid cancellations and work out payment plans. Few are responding. According to a survey of Bangladesh’s garment factories conducted in March, nearly half had lost "a big share" of their orders. Nearly all buyers, most of whom are located in Europe, have refused to contribute to wages for furloughed workers.In the short term, such steps might help apparel companies weather a downturn. But the last decade should’ve taught them that — at least in the eyes of their customers — they have a deeper responsibility to the workers who manufacture their merchandise. A 2018 survey of consumers in seven countries found that nearly three-quarters of them believed that clothing companies should be held responsible for what happens in their factories and should transparently disclose working conditions. The danger is that the coronavirus gives factory owners and governments an excuse to roll back expensive safety programs and ignore hard-earned progress on wages and working conditions.There’s no easy fix when pain is being shared across an industry — not to mention across the world. But all parties would benefit if retailers and brands committed to a shared responsibility for paying garment workers for completed work, and contributed to a reasonable severance during the inevitable virus-driven slump. On Monday, Swedish fast-fashion giant H&M announced it would take delivery of goods (including those in production), and pay for them. Other brands should follow suit. Doing so will help long-time manufacturing partners who've improved safety standards and workers’ rights to stay in business through the pandemic.Meanwhile, rich-country governments keen to support labor rights in Southeast Asia should maintain preferential trading policies with the goal of supporting the region's workers through a devastating downturn. That should help some of the world's most vulnerable get through the next few months, while ensuring that years of progress made by the global apparel industry isn't left in tatters.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Adam Minter is a Bloomberg Opinion columnist. He is the author of “Junkyard Planet: Travels in the Billion-Dollar Trash Trade” and the forthcoming "Secondhand: Travels in the New Global Garage Sale."For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- This should have been Ocado Plc’s crisis.The online-only grocer should have been capitalizing on shoppers avoiding crowded stores. Instead, last week it temporarily closed its website, potentially upsetting its customers. Still, investors clearly believe that it will emerge as one of the winners from the rush to buy toilet paper and tinned soup. As of Friday, Ocado’s shares were up for the year.But the pandemic has exposed some of the flaws in the group’s business model, which relies heavily on large, state-of-the-art robotic warehouses. Others, such as Walmart, take a more low-tech approach, fulfilling grocery orders from stores, where employees pluck packs of sausages and cereals from shelves for delivery to home or collection from supermarkets. When demand surges, it is much quicker and easier to ramp up the rate of grocery orders from stores compared to warehouses. As long as there are enough loaves of bread and toilet roll, more employees can simply put them into crates to be delivered to homes. In contrast, building and stocking automated warehouse is time-consuming and expensive. That makes Ocado’s business model less flexible.The debate about which approach is best is about to cross the Atlantic. In 2018, Ocado struck a deal to run the online grocery operations of Kroger Co, the U.S.’s second biggest grocer after Walmart. The two U.S. food retail giants will be taking diametrically opposite routes to meeting online demand, which was expected to grow anyway even without the pandemic. We’ll have to see which ultimately wins out, although right now, the ability to quickly scale up and exploit stores looks to have a lot of advantages. Ocado Retail, which is now a joint venture with British high street stalwart Marks & Spencer Group Plc, said last Thursday that so far, sales growth in its second quarter was running at twice the rate of the 10% expansion in the first three months of the year. But sales could have been up 50-100% — if Ocado had enough room or robots to pack more orders.Part of this is bad luck. Just over a year ago, the company suffered a catastrophic fire at its cutting edge facility in Andover, shutting down a space that would have been able to fulfill 60,000 orders a week. It has since clawed back some extra capacity at another facility that was being used by Wm Morrison Supermarkets Plc, its first online partner. But it hasn’t been able to make up all that was lost.In contrast, Morrison, which sells through its own website and Amazon, is roughly doubling the number of stores that fulfill online orders to about 100. This isn’t all bad for Ocado, as Morrison’s own website will still use its technology to pick orders. But it does underline the greater flexibility of the old-fashioned approach.Brick-and-mortar grocers have another advantage too: They can be used as pick-up points for customers. In the U.K. this is known as “click and collect”; elsewhere, it's curbside or same-day pick-up. This is a strategy that Walmart has embraced successfully, as it already offers pick-up from 3,200 stores and will add another 500 locations this year. But Ocado is committed to its automated warehouse model, as it believes this delivers the best returns — even though the group has only made a pre-tax profit in a handful of years. The group does also have more traditional warehouse space due to open in the next year or so. And it has other alternatives that it should draw on. For example, it is building a facility in Bristol, which is about half the size of a normal warehouse and takes half the time to construct, around a year. Putting more emphasis on smaller hubs like this, and seeing whether they can be shrunk further, would be wise. This would enable facilities to be built more quickly, making the model more nimble. Another thing the online grocer should think about: It doesn’t have a facility for click and collect right now either. It should explore ways of adding this. From its partnership with Marks & Spencer, Ocado now theoretically has access to a large store estate. Even when this pandemic passes, it will leave a long-lasting impact on the way we purchase. Ocado should learn its lessons now, and adapt its business model accordingly, so it doesn’t have to shut up shop next time there is a crisis.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
British retailer Marks & Spencer <MKS.L> warned on Friday trading over the next 9-12 months in its clothing, homewares and international businesses was likely to be "severely impacted" by the coronavirus pandemic. "M&S has served customers without cease through two world wars, terrorist bombings and numerous local disasters and we are determined to support our customers now as we always do," the 136-year-old group said. Shares in M&S were down 5.3% at 0829 GMT, taking losses for 2020 so far to 49%.
British environment minister George Eustice said on Friday he had been reassured by supermarkets that they had contingency plans in place to prevent food shortages linked to coronavirus. "The retailers reassured me they have well-established contingency plans and are taking all the necessary steps to ensure consumers have the food and supplies they need," Eustice said in a statement following a meeting with representatives from the food industry.
The following are the top stories on the business pages of British newspapers. - U.S. private equity firm KKR & Co Inc has ruled itself out of a bid for NMC Health Plc after the troubled private hospitals group said that it had been approached. - Link Real Estate Investment Trust, which has extensive property investments including shopping centres in China, abandoned talks to support Intu Properties Plc's planned equity raise at the end of this month.
(Bloomberg Opinion) -- Ocado Group Plc, the British online grocer that’s morphed into a technology company, has always been a jam tomorrow stock. Now it’s asking shareholders to wait not just for the jam but the full afternoon tea.The specialist in automating how supermarket orders are filled on Tuesday announced that its 2019 pre-tax loss jumped to 214.5 million pounds ($277 million), from a loss of 44.4 million pounds a year earlier. Part of this was due to a damaging fire at its Andover warehouse almost exactly a year ago, which was unfortunate but Ocado has coped well with the disruption.What’s more worrying for investors is the impact of investment in its burgeoning international division, which has been striking deals to operate the online grocery businesses of chains from the U.S. to France and Japan. While that’s a credit to Chief Executive Officer Tim Steiner, who has been knocking on retailers’ doors for the the past five years, it means Ocado has an awful lot to do — and pay for. Ocado’s international technology arm could be more lucrative in the future, but for now, it’s a drain on capital. Consequently, Ocado said expenditure would more than double this year to 600 million pounds. Take away the impact of the warehouse fire, and that leaves a balance of just over 500 million pounds for building state-of-the-art warehouses that are fully equipped to pack grocery orders with limited need for humans.The majority of this will be spent on getting its automated warehouses up and running for international customers, including Casino Guichard Perrachon SA in France, Canada’s Sobeys Inc. and the U.S. chain operator Kroger Co. Some of the expenditure will be offset by expected fees from its international clients of more than 100 million pounds, but most of it is a down payment on future income once the systems are fully up and running. That doesn’t leave much scope for any unexpected hiccups in the meantime.Until those warehouses are open, Ocado cannot recognize the international revenue, but it must incur the costs. That showed in its 2019 results. Ocado invoiced fees of 81.4 million pounds to its international partners, an increase of almost 40%. But revenue from this arm was less than 1 million pounds, while it made a loss before interest, tax, depreciation and amortization of 62.1 million pounds. For this year, Ocado forecasts international revenue of less than 10 million pounds. Warehouses for Casino and Sobeys will be open for only part of the period. In the meantime, Ocado must continue its heavy spending. It had 751 million pounds in the bank at the year end, thanks to its deal to sell half of its U.K. retail business to Marks & Spencer Group Plc. It also raised 600 million pounds through a convertible bond issue after the year end. The company says this gives it plenty of headroom. But with such an investment burden over the next few years — it has also signed a deal with Aeon Co. in Japan — further calls on shareholders can’t be ruled out.And let’s not forget challenges closer to home. In September, M&S will replace Waitrose as Ocado’s supplier for its U.K. online supermarket, a massive changeover with huge execution risk.For now, investors appear confident that once the different warehouses are operational the fees will start to flow into profit and cash flow. The shares have risen by a third in the past year. Ocado’s enterprise value is currently just over 4 times forward sales, even ahead of Amazon.com Inc., on just over 3 times.This looks divorced from the reality of both Ocado’s spending needs, and the long haul to generate a return on its investment.To contact the author of this story: Andrea Felsted at email@example.comTo contact the editor responsible for this story: Melissa Pozsgay at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Marks & Spencer <MKS.L> on Tuesday appointed Eoin Tonge, currently the chief financial officer of Irish food group Greencore <GNC.L>, as its new finance chief, filling a void left by the departure of Humphrey Singer at the end of last year. Tonge joins at a difficult time for M&S, whose shares have fallen 35% over the last year. After more than a decade of failed re-inventions, the 136-year old clothing and food retailer set out on its latest transformation plan shortly after retail veteran Archie Norman became chairman in 2017 to work alongside Chief Executive Steve Rowe, who has been with the firm for 30 years and became the boss in 2016.
The following are the top stories on the business pages of British newspapers. The Financial Reporting Council has outlined measures to increase scrutiny of audit firms and corporate reporting, speed up enforcement and streamline its own governance structure in its draft budget for 2020. The heating and plumbing group Ferguson Plc is heading for a clash with its British shareholders after revealing plans for a possible listing in the United States that could result in it abandoning the FTSE 100.
Does the January share price for Marks and Spencer Group plc (LON:MKS) reflect what it's really worth? Today, we will...
(Bloomberg Opinion) -- Almost a year since competition authorities dealt a mortal blow to J Sainsbury Plc’s $9.1 billion plan to buy Walmart Inc.’s Asda, Mike Coupe is stepping down as chief executive officer of Britain’s second-largest supermarket chain. He’s been at the helm for almost six years and will be 60 in September, so it’s a natural time to hang up his grocer’s apron.But Coupe’s departure looked inevitable once the Asda combination collapsed. Whether or not Sainsbury mishandled the competition risks, for any CEO, grinding out growth in a sluggish market is far less exciting than pulling off an audacious deal.The choice of Simon Roberts, currently retail and operations director, to succeed him is a surprising one given that his most recent experience before Sainsbury wasn’t in food retail, and he’s a relatively new arrival at the group. Sainsbury’s former finance director, John Rogers, was widely seen as Coupe’s heir apparent, until he left for advertising company WPP Plc in October. This may explain his departure. Roberts, 48, is a hands-on shopkeeper. He spent 15 years at Marks & Spencer Group Plc and 13 years at Walgreens Boots Alliance Inc. before joining Sainsbury two and half years ago. But the changes that Sainsbury has made to its stores since then haven’t always gone smoothly. A management overhaul in 2018 led to empty shelves and unkempt shops. In a fast-changing retail market, executives need to augment operational expertise with strategic vision. It’s not yet clear that Roberts has that.It’s interesting that Britain’s two biggest supermarkets, Tesco Plc and Sainsbury, will be led by executives who spent many years at pharmacy retailer Boots. Perhaps it’s replacing Asda as the training ground for top executives. It may be that working for Walgreens CEO Stefano Pessina, who’s known for not suffering fools gladly, is the perfect preparation for taking on difficult challenges — even the brutal U.K. supermarket business.Roberts will need all of the skills he honed under the Italian dealmaker to keep Sainsbury on track. First of all, he must continue to battle the company’s other major rivals which make up the U.K.’s Big Four grocers — Tesco, Asda and Wm Morrison Supermarkets Plc. And he must defend Sainsbury from the U.K. arms of the German discounters, Aldi and Lidl, which are increasingly forging into Sainsbury’s heartland in the south eastern U.K. Coupe did a good job cutting Sainsbury’s prices on everyday items. Roberts must continue this. For a while in 2018 and early 2019, after the damaging store-management overhaul, sales growth slipped behind that of rivals. Sainsbury was beginning to look like the sick grocer from which everyone else was seeking to steal market share. Its sales have recovered since, but Roberts must maintain that momentum.Secondly, Sainsbury must get Argos, the catalog retailer that Coupe acquired four years ago, back on track. The business, which sells everything from toys to tents, had a poor Christmas. In order to defend itself from the mighty Amazon.com Inc., it must better exploit its combination of online presence and bricks-and-mortar stores, as well as ensure its prices are right. On Tuesday, Sainsbury announced it would further integrate Argos into Sainsbury, axing hundreds of management jobs and cutting costs as it merges divisions including commercial retail and finance. This program must be managed without disruption.If all of this doesn’t go to plan, there is always the risk that Sainsbury, perennially tipped as a takeover target, could finally attract the attentions of a bidder. No one can fault Coupe for his bold decisions. In an environment where just keeping your head above water is hard enough, he was prepared to make daring moves. Unfortunately, they didn’t always pay off.To contact the author of this story: Andrea Felsted at email@example.comTo contact the editor responsible for this story: Melissa Pozsgay at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.