Tech bet: M&S chief exec Steve Rowe
Marks & Spencer sensibly looks to be getting in its defence before it unveils its holiday sales data tomorrow. No one is expecting anything too terrible.
Amid the general optimism about grocery, exemplified by Morrisons buoyant sales, Kantar, among others, is expecting a strong end of the year for M&S’s upmarket food halls.
If this is the case, a more modest outcome for clothing and homeware should not be a shock.
There is a recognition at the top that in spite of a past heavy investment by the group in state-of-the-art technology, M&S still lacks the state-of-the-art digital offering of rivals such as Next.
Having given Amazon the boot, so as to let a thousand M&S flowers to bloom, the technology it developed may not be fully up to scratch.
Users will know that navigating the website is not the easiest of tasks if looking for the basics such as a pair of black trousers.
Moreover, in spite of the investment in great logistics and new warehousing, M&S is not fully capable of delivering its fresh foods to the door nor is it as able to process information and turn around fashion with the speed which gives Asos an edge.
Under the guidance of chief executive Steve Rowe and managing director Jill McDonald, the wheel is turning again.
Tata Consultancy Services is to help deliver what M&S calls a ‘digital-first business’ (has it been listening to Donald Trump?) with the objective of improvement in customer experience. That can never be a bad thing.
How it intends to do this is not entirely clear from its grandiose announcement, but a key element seems to be to tie suppliers more closely into its technology platform so M&S can, in the words of Rowe, be more ‘agile, flexible and responsive’.
The tech switch looks to be remarkably cheap for a company with projected sales of £10.6billion this year.
There is a one-off cost of £25million and projected efficiencies of £30million a year by 2022.
Big spending on IT doesn’t always deliver the results as the London Stock Exchange once discovered before opting to buy a cheap off-the-shelf trading system from Sri Lanka.
When it comes to IT they seem to know what they are doing in the subcontinent.
Rowe recognises that M&S shareholders have lost patience with big spending capital projects, including multiple makeovers in the stores, and is opting for capital light solutions. That must be right.
Creditors will have to reach deep if they are to save fading construction outfit Carillion from the knacker’s yard.
The equity value of the company has shrunk to just £100million over the last year supporting a mountain of £925million of debt.
Yet it is too important a firm, with its HS2 high-speed link contracts, to be allowed to tip over the precipice.
Chief executive Andrew Davies, from construction group Wates, who starts on January 22, has a titanic task ahead.
He shouldn’t despair, however, but instead take a look at the transformation made by turnaround specialist Leo Quinn at competitor Balfour Beatty.
The game plan at Carillion is to persuade banks that they are going to take a big hit. One possibility is for lenders, including Santander UK, to take losses now by turning debt into equity, in the hope that Carillion’s core engineering and contracting skills will eventually allow it to recover.
To get to that point will require it to sell some non-core enterprises, such as the private-public partnership, and to persuade investors that it is worth supporting a modest rescue rights issue.
There is a difficult path ahead not helped by a Financial Conduct Authority inquiry into allegedly failing to keep the stock market properly informed.
There will need to be considerable pain if Carillion is to tunnel its way out of a mess.
The Mario Draghi medicine is delivering for the eurozone.
Unemployment across the region slipped from 8.8 per cent to 8.7 per cent in November and is now at its lowest level since the euro crisis erupted in 2009.
It ranges from just 3.7 per cent in Germany to a horrific 16.7 per cent in Spain.
Still some way to go then before the European Central Bank can follow the US and Britain in starting to normalise interest rates.
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