The fall of Marks & Spencer (Part II)

Marks & Spencer was the fifth most highly-valued public company in Europe by 1982.

Part I of this history of Marks & Spencer can be read here.

Growth of the business
Marks & Spencer overtook Woolworth as the leading retailer in both sales and profits in Britain in 1968. The company was one of the largest in Britain, with a market value of £615 million in 1970.

Marks & Spencer employed 37,094 people in 1972, placing it just outside the top 50 employers in Britain. The company enjoyed a turnover of £360 million and employed capital worth £160 million in 1973.

Marks & Spencer began to sell frozen food from 1972. Convenience food was being sold at 100 stores by 1973.

Marks & Spencer expands overseas
Marks & Spencer had saturated the British mid-market clothing sector by the early 1970s, and began to look overseas for further growth. The company acquired a 50 percent stake in three Canadian clothing retailers in 1973. A controlling interest was acquired three years later.

In order to increase margins the company began to sell luxury items in its British stores.

A Marks & Spencer outlet was opened in Paris in 1975. The store ranked among the company’s top ten worldwide in terms of sales and profitability by the mid-1990s.

Marks & Spencer developed a reputation for treating its staff well, and employee absenteeism rated at just three percent in 1976.

Marks & Spencer claimed one eighth of the British clothing market by 1977.

Marks & Spencer had the fifth-largest public company in Europe by 1982, with a market capitalisation of US$3.7 billion and annual sales of just under £2.2 billion.

Marks & Spencer was considered one of the best-managed companies in the world throughout the 1970s and 1980s.

The first non-family member was appointed as chairman and chief executive in 1984.

The first location outside a town centre was opened in Gateshead in 1986.

Marks & Spencer made two United States acquisitions in 1988; Brooks Brothers, the clothing retailer, and Kings Supermarkets. It was widely suggested that Marks & Spencers overpaid for the 47-strong Brooks Brothers chain, which it acquired for $750 million.

Marks & Spencer operated 275 stores in Canada and eight stores in France by 1990. That year the company opened its first store in Spain.

Marks & Spencer employed 55,750 people by 1992. It was the twentieth-largest private employer in Britain.

The Canadian venture had been unprofitable in all but three of its twenty years by 1993. Brooks Brothers continually underperformed.

Marks & Spencer was the only retailer in the world with a AAA credit rating in 1994. The business had a reputation for quality and value for money. It boasted a turnover of over £5 billion and 679 stores.

Marks & Spencer held a 17 percent share of the British clothing market by 1996, and five percent of the food market.

Subsequent troubles
Marks & Spencer reported a sudden slump in profit in 1998. Excessive margins had eroded customer loyalty. The company withdrew from the Canadian market in 1999.

Marks & Spencer announced a radical restructuring of its operations in 2001. The British business was revamped and its United States retail operations and company-owned stores in Europe were divested. Brooks Brothers was sold for $225 million, less than a third of what M&S paid for it thirteen years previously.

Marks & Spencer was relegated from the FTSE 100 in September 2019.

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