M&S outlines shake-up proposals :: Namibia Internet Gateway cc ::

Articles: M&S outlines shake-up proposals

Posted by admin on Monday, July 12, 2004 - 01:21 AM

Marks & Spencer has unveiled plans to return £2.3bn to shareholders under new chief Stuart Rose's proposals to revive the High Street retail giant.
The group will also "focus on customers" in an effort to revive falling sales across the business. M&S said it would sell its financial services business to HSBC for £762m and that it would buy the Per Una clothing business from George Davis for £125m. The firm is facing a takeover approach from entrepreneur Philip Green. The plans did little to boost M&S on the market - in early morning trade shares in the firm were little changed, up 0.07% to 368.25p, significantly below Mr Green's current offer of 400p a share. Store closures Under cost-cutting plans, which aim to save £320m by 2006/7, M&S will be shutting down stores. First on the chopping block will be the group's new Lifestyle concept store in Gateshead, as well as many of its smaller Simply Food Stores. "Today's announcement sees us refocusing on our core retail activities with an emphasis on delivering great product for our 25 million customers," Mr Rose said. "The business has substantial further trading potential, which will be unlocked through a return to the core values of quality, value, service, innovation and trust." The High Street retailer is trying to convince investors that the turnaround plan will boost the value of the group beyond the 400p a share offer proposed by Mr Green. But Mr Rose denied that the £1-a-share cash back offer was part of a bid to bribe shareholders. He told the BBC that shareholders would make their decision after his presentation at the group's annual general meeting later. Bid rejected Last week, M&S dismissed Mr Green's higher offer of £9.1m saying it "significantly undervalued" the firm. As part of his update today, Mr Rose pledged to deliver value "significantly in excess" of the 400p a share currently offered by Mr Green. Mr Green has said he will know within 48 hours whether M&S shareholders are backing the company or him. BBC business editor Jeff Randall said that the plans did not contain many surprises and had been "widely expected" by many analysts. "I can't see a really big rabbit in the hat," he told BBC News 24, adding that the shake-up was merely "good housekeeping". Focus on customers The one surprise was that the firm did not have ownership of the Per Una brand - which brought in profits of £17m last year. Mr Randall added that the firm would now be concentrating on getting more female customers into the store more often by concentrating on its product range. The firm aims to cut back on its ranges, while offering more depth and less store clutter. The moves, along with store closures, aim to tackle the group's sagging sales. Figures released with the statement show that the group's non-food sales sank 3.7% year-on-year between April and June, while food sales were down 1.5% during the same period. Mr Rose added that the move would see the group concentrate on its 11 million core customers - mainly women in the 35-55 age group, cutting product lines and brands. "Women want good clothes... our key task is to sell more clothes to core customers - who I think have been neglected," he said. 'Jam tomorrow' But the plans failed to get a warm welcome in the financial world. "I wonder whether this is enough," said BNP Paribas analyst Rebecca McLellan. "I think it's probably low to middle of the expected range, the cash sweetener could have been better, beyond that there's quite a lot of jam tomorrow in terms of cost savings." Meanwhile, broker Panmure Gordon agreed, telling clients that the statement was likely to increase Mr Green's chance of winning the takeover tussle.

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