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Marks & Spencer – Awaiting Sir Archie
Marks & Spencer M&S must be desperately awaiting the arrival of Archie Norman in the hope that he can achieve the turn round which has so far eluded the company. Todays results paint a sorry picture for a company which was once the leading presence on the UK high street.Profit before tax for the year to 1st April fell by 63.5%, basic earnings per share by 70.7% and profit after tax by 71.1%. Revenue growth of 4.2% in food sales came from new stores.On a constant currency basis like for like sales in home and clothing fell by 3.4% but home and clothing was a main item in current plans for recovery and growth. Despite this management is to reduce space for home and clothing by between 1 and 2% Overall like for like group sales for the year fell by 1.1%.
Babcock International BAB continued its enviable record of strong growth in the year to the end of March. The full year dividend is to be increased by 9.1% after a revenue increase of 7.1% and rises of 7.6% in profit before tax and 8% in basic earnings per share.. The year saw significant breakthroughs with receipt of the first ever orders from the French Ministry of Defence and becoming the first non US company to win business for a critical US nuclear submarine programme. The order book remains robust.
Mediclinic international MDC is to pay a final dividend of 4.7% making a total for the year to the end of March of 7.9%, in line with its dividend policy. revenue for the year rose by 30%, earnings per share by 5% and earnings by 29%. The company benefited from the weakness of sterling. South Africa’s performance was particulary strong but the Middle east was very and did not come up to expectations.
Dixons Carphone plc DC. claims another good year with a 4% rise in like for like revenue, although in the final quarter to the 29th april, this fell to 2%, due mainly to a late Easter and the delayed arrival of the Samsung S8. Southern Europe has had a very good year with like for like revenues up by 6% and Greece being a particularly strong performer.
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Archie Norman Will Need More Than Singles Nights To Save Marks
Archie Norman made his name, not as the boss of ASDA but as the man who saved ASDA, and he was brilliant enough to do so virtually overnight. ASDA had taken the established supermarkets by storm and given them hard lessons in retailing. Then, all of a sudden for no apparent reason, shoppers were deserting it in droves and things got so bad that it had empty shelves as suppliers cut off supplies, fearing that it was going bankrupt, which left to its own devices, it probably would have.
Within 3 months of Archie Norman taking over, ASDA was unrecognisable – fully stocked, “colleagues” whose only wish was to serve, and unheard of in those far off days of the early nineties, a golden rule, that if more than two people were at a checkout, then more check outs had to be opened immediately. Customers loved it, a supermarket which was actually putting them first, with new initiatives galore. Even a singles night for the lonely shopper. Thursday night at ASDA could be quite an experience, as eyes met across the frozen peas and trolleys “accidentally” bumped into each other, ever so gently and with profuse apologies from the blushing owners.
Friday’s sudden, surprise announcement that Archie Norman had agreed to take over as Chairman of M&S, raised more than an eyebrow, it sent the share price roaring ahead by some 5%. Indeed there is more than a slight similarity between the old ASDA and the sorry state which Marks now finds itself in. It is only six weeks ago that it was forced to announce that it was pulling out of mainland China,completely – closing down for good in what is now the worlds largest retail market. This followed on the heels of November’s announcement that it was pulling out of a number of major European countries and closing its flagship store in Paris.
Will Mr. Norman be able to repeat his success at ASDA. If anybody can save Marks, he can but it is now a different ball game entirely. It is not a just a major retailer which is at risk, it is the concept of high street shopping itself which is under threat, as online shopping takes over from that tiresome Saturday afternoon drag round the shopping malls. Will he be able to change the way Marks thinks just as he did with ASDA.
Very often it is the periphery of a large organisation which gives the game away and shows how deeply the rot has set in. One can not be more at the periphery of M&S than Greece and what a disgrace their operation is here. Management seems to be non existent. The late Lord Marks used to be proud of the fact that he could visit any of their UK stores and be instantly recognised by store managers. Store managers in Greece appear to be ashamed at even the thought of being seen on their own shop floor.
My last two visit to an M&S food store in Athens resulted in me leaving my purchases at the check out because there was nobody there to serve me. One assistant was making a special coffee for two customers at the coffee bar and the rest of the staff were tidying the shelves and completely and deliberately ignoring customers. Both check outs were unmanned.
On a previous occasion all the shop floor staff were being spoken to by a lady apparantly from head office, perched precariously on her very high heels and so, so important, that she was only allowed to carry a single sheet of paper in her hand. Again the check outs were unmanned. I asked her if they were closed when she asked me, as I wason my way out, if she could help. I suggested that she could perhaps take herself to a check out and start serving customers. That did not go down at all well but it is even worse in the clothing department.
As a sign of how management has thrown in the towel, one M&S store is across the road from a Lidl, which like all supermarkets in Greece, opens at 8a.m., except for Marks, which steadfastly refuses to open its doors until 9a.m. by which time Lidl will have taken tens of thousands of Euros and Marks will not have taken one. Customers have been seen knocking on the doors and windows of Marks trying to get in but the staff just point at their wrists and indicate they must wait for 9a.m..
Archie Norman is going to have his hands full.
The High Street – Still Alive And Kicking But Online Threat Grows
Marks & Spencer MKS gives a very brief summary of its trading for the 13 weeks to the 31st December. Group sales rose by 5.9% on a reported basis. Food did well with a rise of 5.6% or 0.6% on a like for like basis and continuing to increase its market share. Sales in clothing and home did even better on a like for like basis with a rise of 2.3%. Total like for like sales were up by 1.3%. The high street may still be a battleground but at least Marks emerged unscathed from the most important trading period of the year.
Tesco TSCO claims its first increase in market share since 2011 following strong and sustained progress in its 3rd quarter, covering the 13 weeks to the 26th November, which also produced the 8th consecutive quarter of volume growth. Over the 6 weeks to the 7th January the rise in like for like sales continued with growth of 0.3%, the UK being particularly strong with a rise of 0.7%. Clothes and toys produced over all sales rises of 4.3% and 8.5% respectively. The one weak point was International which produced like for like falls in both the 3rd quarter and over the 6 week Xmas period.
Mothercare MTC showed a return to growth in the UK for the 13 weeks to 7th January with a 1% rise in like for like sales but International sales still has problems with a total fall of 6% in constant currency terms, the day being saved by currency fluctuations which turned that into a rise of 13% in real terms. Online growth was particularly strong with a rise of 5.5% taking online’s percentage of total sales up to some 40% of total sales. Perhaps this is an indication of the future of retailing.
Debenhams DEB Is pleased with what it claims to be a resilient performance, with like for like sales over the 18 weeks to 7th January up by 3.5% or 0.5% on a constant currency basis. Online sales were strong with a rise of 13,9% taking online’s growth over 2 years to more than 25%. The 7 week Xmas period to 7th January produced like for like growth of 5% or 1.7% on a constant currency basis.
ASOS ASC provides more evidence of the growing power of online retailing with growth which dwarfs that of the high street retailers. Total group revenue rose by 30% on a constant currency basis for the 4 months to the end of December. The UK looked positively pedestrian against this with a rise of only 18%, which ASOS nonetheless claims is a strong performance in a more promotional market.
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Brand CEO Alan Green with Zak Mir on TipTV – Prospects for 2017 – Reasons to be Cheerful
Brand CEO Alan Green with Zak Mir on TipTV – Prospects for 2017 – Reasons to be Cheerful, plus stocks including Marks & Spencer (MKS) and IG Group (IGG). Link here
CEO admits Marks Business Is Unsustainable
Marks & Spencer MKS CEO Steve Rowe openly admits in todays strategic update that Marks business is not sustainable and needs to be built into one that is and one which will also delight its customers. If its stores in Greece are anything to go by he is dead right and it is going to take a lot of work to make them anything like sustainable and pleasing.
How can you make a profit if you can not bother to open up until 9am. when you are within 100 m. of a Lidl which opens and has queues from 8a.m. and 50 m from one of Greeces largest supermarkets which like most shops also opens at 8a.m. The M&S staff in the clothing store are so unsupervised that they go and sit on the steps outside and smoke whilst customers queue because of unattended check outs and are told if they want to be served quicker they must go upstairs. it is in the backwoods of a business that management weaknesses are exposed not in stores within a stones throw of head office.
Food sales for the half year to 1st October did rise by 4% and made good progress but like for like sales still fell by 0.9% despite outperforming the market. Clothing and Home fell by 5.3% or 5.9% on a like for like basis. In the UK like for like sales fell by 3.0%. Basic earnings per share for the half year slumped by 90.5%, statutory profit before tax by 88%. and on an underlying basis profit before tax was down by over 18%
Punch Taverns PUB Average profit per pub rose by 4% during the year to 20th August as strategic disposals came to an end. The year produced a strong set of results but nowhere near strong enough to reinstate a final dividend. Underlying profit before tax was down from £60m to £53m. but last years loss of £105m was transformed into an actual profit before tax of £60m.
GETECH GTC Profit before tax fell by nearly two thirds during the year to 31st July and earnings per share were down from 5.77p to 3.25p. However steps taken in the first half strengthened considerably the performance in the second half. The backdrop to the company’s performance remained challenging as oil prices remained low and volatile.
Aviva AV. is raising its interim dividend for the half year to the 30th September by 117% to 13p but it is only doing this so that full year dividends are re weighted towards the interim dividend. I winder how the final dividend will be re weighted. The full year outlook is in line.
Telit Communications TCM expects to finish the current year strongly, with double digit growth anticipated in EBITDA and earnings per share.
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Brand CEO Alan Green discusses a range of topics MKS, ASOS & TYM with Zak Mir on TipTV
The opening segment of today’s London open show has Alan Green, CEO of Brand Communications and Tip TV’s Zak Mir discuss broad range of topics, from risk-on appetite in the markets to UK politics, Japanese stimulus talk and its implications on the financial markets. Green also discusses his stock picks – ASOS (ASC), Marks & Spencer (MKS) and Tertiary Minerals (TYM) – and presents technical and fundamental rationale for the same. The show concludes with a look at Broker forecasts.
Sports Direct Disappoints – Targets For Staff Rewards To Be Reduced
Sports Direct SPD has not had a good year. It openly admits that the year to 24th April was disappointing, so disappointing in fact that it failed to reach the targets for the share based incentive scheme for eligible staff which is part of the company’s “high performance and reward culture”. So what are they going to do about it. No problem, easy – they are going to change the incentive scheme by making it easier to reward staff who haven’t produced the necessary results. Of course it wasn’t really the staff’s fault that targets weren’t met this year, it was because of tough trading conditions in the second half and tough trading conditions are as we all know completely outside the control of any company.
Preliminary results show group revenue rose by 2.5% but underlying profit before tax was down by 8.4% and earnings per share by 8.7%.
Marks & Spencer MKS had a fairly disastrous third quarter except in food where sales rose by 4% and strongly outperformed the market but even there, on a like for like basis they fell by 0.9%. Clothing and home sales fell by a whopping 8.3% but that was part of a deliberate policy to increase sales eventually. When “eventually” will arrive is not specified. Overall UK sales for the quarter to 2nd July fell by 1.1%. From my visit to M&S yesterday, any company which thinks it can get away with charging 24.99 Euro for a 3 pack of underpants, is living in cloud cuckoo land, especially when you have to queue for the privilege of paying for them.
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Retailers On The Rebound
Marks & Spencer MKS what a pleasure it is to see a shopkeeper back in charge of Marks and not just any old shopkeeper but one who knows the business inside out, one who has started turning it round in a very short time and who sounds confident and is confident that he can do the job.
The first sign of his success is continuing strong growth in food plus the realisation that sales performance in Home and Clothing has been unsatisfactory and the determination to rectify it. Profit before tax for the 53 weeks to the 2nd April is down 18.5% and basic earnings per share by 16.2% but a final dividend of 11.9% makes an increase for the full year of 3.9%. Confidence in the future means that a special dividend of 4.6p for the first half of the current year will be payable in July. Central to Steve Rowe’s recovery plans is that Marks will put customers back at the heart of the business which is bad news for the Greek stores who may now be forced to start offering customer service occasionally.
Dixons Carphone DC has enjoyed a strong fourth quarter to finish off a very strong year. Like for Like revenue rose by 5% both for the quarter and for the year, with market share gains in the UK & Ireland, the Nordics and Greece. The UK and Ireland had an excellent year with like for like revenue up by 6%. Profit before tax is expected to have risen by 17% over last year.
Babcock BAB is raising its dividend for the year to 31st March by 9% after rises of 5% in profit before tax, 4% in revenue and 8% in basic earnings per share. It claims that it is well positioned for future growth and that the order book and bidding pipeline are impressive. 78% of revenue for the current year is already in place and 53% for 2017/18
Petra Diamonds PDL Christies Magnificent Jewels auction on the 9th June, will include the largest Fancy Intense Blue Diamond ever to be auctioned. Petra expects the 24.18 carat stone to fetch between $23 -$29 million. Petra’s share price now standing at 119p has more than doubled since November.
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Warmest For Over 350 Years and Bonmarche Blames The Cold
Bonmarche BON. Lame excuses from the CEO of Bonmarche as he blames the cold winter weather for a poor 4th quarter performance. Figures released today show that the winter of 2016 will have been the warmest for over 350 years, so pull the other one Mr. Butterwick.
The year got off to a good start with the January sales but then February and March became challenging because of this alleged cold winter, which the company says was unhelpful in kick starting real demand for its spring products.
Winters should be cold. We wrap up for them. They occur in January, February and the first 3 weeks of March – every year.
Like for like sales rose by 0.5% in quarter 4 (i.e. to the 26th March) and by 1% for the full year, whilst total sales for the year were up by 5.3%.
Lack of consumer confidence also affected the company’s performance and profits are expected to be at the lower end of guidance. It is not going to get any better either, with 2017 looking to be challenging and the outlook cautious. One wonders, if they are reduced to making excuses which just don’t wash, should they not be taking a look at their product range or their management.
Marks & Spencer MKS is at last going back to its roots and waking up to the fact that the number crunchers who run great swathes of British industry and commerce are not really fit for purpose. If we had relied on the number crunchers there would never have been an M&S, a Morrisons, Tesco, BHS, Premier Foods or a Sainsbury. Most of the High street was created by men with their feet on the ground and fire in their bellies, men who understood what the public wanted and gave it to them at prices they could afford.
The number crunchers have ensured that we do not have a single supermarket which can compete with Lidl or Aldi because not one of them has ever had to sell, sew or bake anything to earn a living.
The first sign of rebellion has come from Marks, whose new chief Exec. started with the company as a Saturday boy and has been with it ever since.
He has not only thought the unthinkable but has actually had the courage to say it – Marks performance in clothing is unacceptable – and he is going to do something about it.
Marks decline started with the introduction of food departments, many, many years ago but it was and always has been primarily a clothing store, where quality and price and the customer came first. It looks like Marks may once again and at long last be being run by a shopkeeper. Long may he reign.
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Retailers Part 2 – Shedding A Little Light on M&S
It is on the borders that the first signs usually appear of an empire starting to collapse. Thus Nero’s fiddling and pyromanics were the forerunners of Goths,Visigoths and other alien tribes hacking away at the denuded borders of the once great Roman empire. The same applies to giant supermarkets. Once head office has lost the plot it shows on the peripheries of the business, which brings us to Marks & Spencer.
M&S has had an on and off presence in Greece for more than 20 years, sometimes with a food department, sometimes without. It was once one of the few establishments where ex pats could buy a taste of home. But what was its main product on display. Shelf after shelf of bottled water. Greece is awash with numerous brands of bottled water and here is M&S bringing it all the way from England to take up valuable shelf space, on which items with a far greater profit could be displayed. Not surprisingly M&S suddenly closed its food departments, virtually overnight.
On the basis of once bitten it wont hurt as much the second time, they eventually decided to reopen food sections and to do so in time for Xmas. The fitting out took place, the shelves were stocked and the areas were roped off pending the big opening day. They remained roped off, potential customers came in droves believing that they must have opened but they hadn’t and didn’t. Eventually it was admitted that they had forgotten to apply for any of the licences required for a food shop. The ropes remained, the stock and the shelving and the displays were removed and the fish and chips, steak pies and cumberland sausage were quickly replaced with fancy ladies underwear. The expats were the same but with a slightly different leer.
Now they have done it again, for a third time, about two years ago or so. One of the new foodstores was a closed down former BHS store, which should have been warning enough to the ivory towers of head office. New freezer cabinets were installed, all very posh with bow fronts, but there was one big difficulty. The only place to display price labels was underneath the bow fronts, facing the floor, instead of the customer. If you wanted to know the price of anything in the stores main freezer display you had either to bend down and peer up at the bottom of the bow front or for comfort, actually kneel down on the floor which would bring your head to just about the right height for reading the label.
A small thing you may say but it is not. It is a sign of a company with a big problem because M&S would have paid out a fortune in consultants and designers fees to create a useless freezer display. What is more, the management of M&S were so divorced from reality and their customers needs, that the displays are still being used. Presumably management could not be bothered to check the store after or before it opened. After all you cant expect a head office man to go down on his hands and knees. That sort of thing is for customers only.
At the same store the staffing arrangements are that one man covers the little coffee bar next to the check out counter and makes the coffees and in between doing that, when he has time, he operates the till and serves the customers. The rest of the staff are engaged to talk to each other and supervise the stock on the shelves. Occasionally they put these onerous duties on one side and start operating a check out The store is not busy. Presumably M&S will be wondering why. The customers know why.
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