Marks & Spencer's Shut-Down

photo: marks & spencer, bd haussmann

Marks & Spencer's flagship Boulevard Haussmann store
- on Sunday.

More Than Underwear At Stake

Email from Jim Auman. Sent via the Internet: Wednesday, 5. April 2001:-

Bonjour Rick!

It seems that Marks & Spencer is retreating from the USA as well. It has just sold its ownership of the trendy and expensive King's Supermarket chain. No word about who will buy it.

My article about Paris past & present - at the rate I'm going, it will be Paris more past and not at all present - will soon be finished. All I need is to do is to conclude it.

A la prochaine,
Jim Auman


There Go the Waterworks

Email from Jerry Blizin. Sent via the Internet: Wednesday, 4. April 2001:-

Ric,

The saddest news about Marks & Spencer - aka Marks & Sparks - giving up the ghost is that there go some of the few free toilets in Paris - in both the Boulevard Haussmann and Rue de Rivoli stores. I know, I know, Printemps also has a john, but for Metropole members over 50 - avec "le pipi insistent" - a shortage in W.C.'s is cruel and unusual punishment.

I understand that using the 'coin' of a historic building is punishable by heavy fines, and having to lug around a supply of two franc coins is hard on the pocket. What will be left?

The old stand-up 'Turkish' in the nearest bistrot requires 'un consommation,' which puts that nasty bladder right back on duty. I know France blames England for everything from the Plantagenets to La Vache Folle, but -sob - how about a fond farewell to the M & S toilettes?

Betty and I have shopped at M & S stores for more than 25 years, ever since I got a cashmere St. Michael's - their house brand - turtle-neck for about 12 dollars in one of their London stores. Of course, this kind of bargain disappeared over the years but I still lug to Paris each year a light M & S silk sweater that cost me about 20 dollars in 1999. With sweaters, jumpers, pullovers - who is going to look under the collar for the brand name anyway?

On this score, the 'bas couture' of M & S remains acceptable as good value. They were, like the American chain J.C. Penney's, a good place to buy staples like sweaters, socks and underwear - and I'm too damn old - and cheap - to be BC-BG.

Honesty compels me to say that of late M & S has slipped, although their food halls are worth doing business with. For instance we found Jacobs Cream Crackers, one of my favorite Brit munchies, in a Paris M & S. Thus, whenever we have been near Beaubourg, we pop in at M & S - and not just for the plomberie!

Jerry Blizin, devoted Metropolist


Dirty Underwear Embarrasses the U.K.

Email from Badger. Sent via the Internet: Sunday, 8. April 2001:-

I know a little bit about Marks and Spencer, having once worked as a Management Trainee in the textile industry.

So - where do we begin?

In his book 'The English Gentleman' (ISBN 0 905649 18 4 - Debretts Peerage Ltd. 1978), Douglas Sutherland writes:

"Shirts are always bought in Jermyn Street, an extravagance which is made to pay off by dint of having the cuffs and collars turned when they get worn, which gives them many years of life. By contrast with the exclusivity of Jermyn Street, he always buys his underwear at Marks and Spencer and always tells his friends about it, as a indication that he is democratic about his clothes."

Well - maybe no longer.

M & S has been selling substantially less of everything - it has dropped its respectable - and democratic? - policy of buying only British, and has got egg on its face by trashing jobs in Europe, America and Asia. But - and this is what is likely to irritate the English gentleman most - its share price gone right down the Swanee over three years, out-diving even the FTSE All-Share index in its recent plunge into the dark depths of despair.

Once a very respectable and traditional pillar of successful British-Jewish commercial acumen - M & S is no longer as kosher as it used to be.

Launched as a market stall in the north of England in 1884 by Michael Marks, a Russian refugee, M & S became a partnership when Tom Spencer came on board in 1894. It grew well - in fact, it grew fantastically

Moving ever upward, M & S adopted a revolutionary policy of purchasing direct from the manufacturer as early as the 1920's. Unheard of in retail circles, this led tophoto: construction sign capital growth, stability, and - to jobs in various industries, a factor which would eventually to cause grief to many.

Construction sign, for an 'extension' to Marks & Spence's Haussmann store.

M & S adopted a stringent policy of 'Buy British' over the years, with a stringent quality-control policy for its 'St. Michael' brand which could almost be described as draconian. This was not only applied to direct suppliers, but M & S also checked their suppliers' suppliers, who in turn had to be given the seal of approval.

Well-known for its laudable charitable contributions, M & S also maintained strong links with Israel, putting its Directors on the Boards of such institutions as the Israel-British Chamber of Commerce.

In 1997, plans were announced to move ahead with a £2.1 billion global expansion, which according to then Chairman Michael Greenbury, would 'create thousands of new jobs.'

But this investment, plus the impact of the strong pound on overseas earnings and budget changes affecting pension costs dragged profits below market expectations. Profits rose a meager five percent to 452.3 million pounds, against forecasts for an increase to 460 million.

Sales were up by six percent to 3.7 billion and the dividend was increased by nine percent to 3.6 pence a share. Despite this, M & S's share price fell as retail analysts cut full-year profit forecasts. The shares fell 17.5 pence.

A year later, U.K. branches were beleaguered by hundred of textile workers as a result of abandoning the previous 'Buy British' policy. The new policy became known as 'Global Ethical Sourcing', and we all know about that, don't we!

Stores continued to open beyond this 'Sceptred Isle' but it didn't work - it didn't work at all, my life!

In the Millennium Year 2000, much was made of Luc Vandevelde's international credentials, when he was piped in as M & S's new chairman. He is Belgian by birth, his most recent employer was French and he had previously worked for an American multinational. He was just the man to take the helm at an international retailer such as M & S.

But despite a final attempt to reverse a dramatic decline in fortunes, Vandevelde finally had to admit that the conundrum of how to fix M & S was in essence a British problem.

In March 2001 an announcement was then made that M & S were planning a melt-down that included the axing of 4400 jobs and a messy withdrawal from the international market.

The group's 38 European stores were to be shut down. Its two American businesses, the department store Brooks Brothers and the supermarket chain Kings, were to be sold and its Hong Kong operation was be franchised. In France alone, 1700 jobs will disappear.

A previous director of M & S stated, "The five cornerstones of M & S were always quality, value, service and excellent support for suppliers and staff. It has messed up the last two, the quality and service isn't as good as it used to be, and M & S can't compete on value on the High Street compared with other mid-market retailers."

Vandevelde's Waterloo came appropriately enough on Sunday, 1. April 2001, when it was announced that the beleaguered retailer looked set to leave its historic Baker Street head office in Central London, in what was described as one of the most radical and symbolic moves in the company's 117-year history. The sale of the imposing building after 55 years could net about £200 M.

I don't buy M & S sandwiches. They are good but expensive. As for underwear, I stocked up in Germany last week - where you get better quality for less shekels. Still, it would be a shame to see this quality store disappear from the U.K.

Maybe Marks and Spencer should have gone global gently. Maybe they should have just listened to their mother. Either way, one thing's for sure - you won't read too much of all this on the About Marks & Spencer page.


Cash Dive

Bonjour 'Metropolists' -

Sunday, 8. April 2001:-I didn't expect the announced closing of Marks & Spencer in France to cause any comment from readers. Two emails on the subject are not a mailsack-full, but they are more than one.

Badger lives in Britain - aka the 'Sceptred Isle' - so I asked him for an 'insider's' comment. He canceled his long-planned all-day Sunday pub-luncheon in order to provide the long comment above, and it did not take a lot of editing to make it fit for Sunday consumption.

In Paris the staffs of the various Marks & Spencer stores have been staging street demonstrations, while keepingphoto: fiat 500 the stores in operation at the same time. They are getting a good reception because they are the 'good will' and human face of this retailer.

It is exactly this 'good will' that sets one retailer apart from another, and it is something that is built up on purpose and usually over a long period of time. It is the sort of intangible that market analysts ignore when evaluating profit expectations - forgetting that if it is willfully destroyed, profit expectations are sure to be too.

On Monday, the French staff of Marks & Spencer will attempt to get a court to decide if the announced shut-down and layoffs are legal. Calling firings 'social plans' should be made illegal too.

The opening photo shows the Marks & Spencer Boulevard Haussmann store. It is shut because it is Sunday. All the other stores around it - its many competitors - are shut too. The photo of the rare Fiat 500 is thrown in as a lucky charm.

The decision to quit operations in Europe and in France must have been a sudden one. Next to the Haussmann store, at the corner of the Boulevard Haussmann and the place behind the Opéra, there is a sign on a big building site that says, 'Expansion and renovation of Marks & Spencer's store.'

I hope the analysts know it is going to cost - somebody else - a lot to get out of this one.
signature, regards, ric

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