Blog: M&S doing the right thing?
Leonie Barrie | 26 May 2009
Marks & Spencer, the UK's biggest clothing retailer, last week launched a new initiative to accelerate changes to the way it carries out its business after posting a 37.5% slump in annual profits. The new programme, called '2020 - Doing the Right Thing', will be led by finance director Ian Dyson, and is meant to steer the 125-year-old retailer back on the road to recovery.
Its aims are to increase the pace of change from design to delivery, drive international expansion in China, India, and Central and Eastern Europe, and speed up the integration of its multi-channel operations.
The measures are largely driven by the desire of chairman Sir Stuart Rose to leave a decent legacy for his successor after annual profits tumbled to GBP706.2m (US$1.1bn) from GBP1.13bn a year earlier.
There was good news and bad news on the financial front for luxury goods maker Burberry Group as it reported revenues that topped GBP1bn for the first time but a series of expenses pushed it into the red for the full year. However, the company believes it is positioned for long-term growth after aggressively reducing inventory and costs.
Sporting goods retailer JD Sports is also eyeing growth, and is looking outside the UK and Ireland for the first time after buying French sports footwear retailer Chausport for EUR8m (US$11m). The company said the acquisition “will give us a foothold in a new and sizeable European market.”
But around 1,230 jobs are to go at loss-making UK fashion chain Bay Trading after administrators managed to find a buyer for around half of its 255 outlets. The deal will safeguard 566 jobs, but the remaining 125 stores will now be closed. The new owner is fashion retailer Rinku Group which already owns chains such as Tigi-Wear, Viz-a-Viz and iZ.
Meanwhile in the US, a decline in margins coupled with lower sales across all divisions dragged specialty clothing retailer Gap Inc to a 13.7% drop in first quarter profit. Same-store sales fell 8%, an improvement on the 11% decline seen last year and one that also prompted speculation Gap’s sales slide is bottoming out. Chairman and CEO Glenn Murphy said the firm was "particularly encouraged” by its Old Navy division, where the rate of same-store sales decline fell to 3% from 18% a year earlier.
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