The rise and fall of Marks & Spencer

The crown of the former king of the high street is now round its ankles, as rivals carve up the middle market it once reigned over. How did it come to this?

by Andrew Saunders
Last Updated: 05 Nov 2013

Formative years

Despite its later reputation as purveyor of quality to the middle classes, Marks & Sparks began life as a proto-poundstore. David Marks - a Belarussian emigre living in Leeds - borrowed a fiver from a chum and opened his Penny Bazaar on the city's Kirkgate market in 1884, selling haberdashery and household knickknacks under the slogan 'Don't ask the price - it's a Penny'. In 1894, he acquired a partner and book- keeper, Thomas Spencer, and M&S was born.

By the 1970s M&S ruled the high street, dominating sales of everything from oven-ready chicken to underwear, Black Forest gateaux to wedding dresses.

In 1998 the company made history as the first British retailer to post a £1bn pre-tax profit.

Recent history

But M&S fell victim to the incumbent's malaise of competition plus its own hubris. Unsustainable margins eroded customer loyalty and let in rivals such as Primark, H&M (and latterly Asos and even Net-a-Porter).

Marks & Sparks' decline from its late 1990s peak was vertiginous - by 2001 shares had tanked by two-thirds and profit crashed to a mere £145m.

A new boss, Stuart Rose, was drafted in, who promptly found himself facing down a series of aggressive takeover bids from his billionaire former employer, Philip Green.

Things got pretty heated - Green once grabbed him by the lapels - but Rose saw him off and stopped the rot. However, M&S's days of high street dominance were gone for good.

M&S Cardiff branch, circa 1900. Image credit: M&S

Who's the boss?

In May 2010, former Morrisons head Marc Bolland took over. He has not had an easy ride, facing heavy criticism for his lack of ragtrade experience - in July, M&S reported its eighth consecutive quarter of falling clothing sales.

On the bright side, M&S's online and food businesses are doing well. But investors are circling - if Bolland can't sort out the schmutter sharpish he's going to be in trouble.

The secret formula

Bolland has belatedly drafted in some big guns to help sort out M&S's fashion sense, notably ex-Jaeger chief exec Belinda Earl, whose first collection is in stores now with 80% more dresses with sleeves, apparently. But is there still a living to be made in fashion by a generalist like M&S?

Don't mention

Takeovers - talk of M&S being acquired is back on the menu, this time with Sainsbury's as favourite, thanks to the deep pockets of its Qatari backers.

VITAL STATISTICS

Sales: £10.026bn
Pre-tax profit: £564.3m
Employees: 82,000

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