This was not just any results announcement, this was a Marks and Spencer annual results announcement. The company’s boss did his best yesterday. He entertained, he sold the company’s wares, he even modelled some clothes. Stuart Rose talked big and outlined bold plans, but they weren’t convinced. Marks and Spencer is a mature stock, it’s not prone to sudden growth spurts, and, despite the razzmatazz yesterday, investors remembered that, from a share perspective, MS is a boring company. The share price has surged in recent years, from only a little more than 300p before Philip Green made his takeover attempt to 560p plus at the beginning of this week. But a mere whiff of bad news amongst all the good yesterday was enough to cause panic, and shares fell by 3%. And, at one point, the fall was even greater.
When Mr Rose was appointed as the new MS boss, in an attempt to fight off the Green bid, much was made of his knowledge. We recall quoting one analyst, who said if you’re with Rose, he can point at your suit and detail how much it cost to make, and where the materials came from. Mr Rose, goes the argument, knows his stuff.
And yesterday, in the company presentation, he focused on product, revealing items of clothing, revelling in their appeal. He even donned one outfit for his audience to admire. We wonder if the world missed the point a tad.
Shares fell because analysts pointed to the cost of refurbishing stores; half a billion pounds has been lined up, yet sales are only expected to jump 10%. Re-designs, according to the pundits, only ever lead to a temporary lift.
Still, Mr Rose revealed much to celebrate. He bemoaned the decision made by the previous management to pull out of France, Germany and Spain, hinted the store may make a return, and unveiled plans to move into the Ukraine, Dubai and other locations around the globe.
Mr Rose also came up with the quite radical idea of selling non branded MS items. No longer will shoppers wanting a camera have to nip over the road to John Lewis, instead MS will offer the goods. It even sold iPods in some stores recently. And there’s the Internet, it’s making a move for a share in the online grocery market.
In all, the company made a profit of £751 million, up 35% from last year.
With the likes of Twiggy and Erin O’Connor helping bring glamour to a company that was looking increasingly dowdy, and with TV ads that actually make you sit up - during the Christmas marketing blitz, even sprouts looked quite tasty in one ad - MS is back in the limelight.
But, what matters is good buying. Rose knows his stuff and, with George Davies’ Per Una range still proving a hit, the magic has returned. If there’s a doubt it’s this: if the last few years have taught us anything, it is that the mighty can fall, and good buying can become bad buying. People matter and, should Rose suffer the business equivalent of a metatarsal injury, the management team will be seriously weakened. But, if the current management regime retains its magic touch for a little longer, and if the proceeds are invested in building a stronger asset base for the future, MS will be great again.
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