written by alastair barlow [blog]
Alastair Barlow examines the history of M&S leading up to its recent deterioration and loss of CFO Humphrey Singer.
Every adult knows Marks & Spencer. Although not everyone will love it; my childhood memories include being dragged around M&S, House of Fraser and Jenners on Princes Street (being very bored)!
However, not everyone may realise that this retailer was the first one to make £1bn pre-tax profits or that they fell out the FTSE100 for the first time (in its 35 year existence) last September – shortly thereafter their CFO resigned, after only 14 months in post.
So, who has the job of taking it back into the FTSE100 and how are they going to do that?
Well, to give you some size and scale, Marks & Spencer is primarily based in the UK, sells into 57 countries from 1,487 stores, and 35 websites around the world. They employ over 80,000 people who serve about 32 million customers. They’re focused on delivering quality products at great value for money. Below are some relevant points before we get into the role of the outgoing and incoming CFOs.
The rise, fall and uncertainties of Marks & Spencer
- Based on a reputation of selling British quality goods M&S grew from humble beginnings in 1884 to become a staple on the UK high-street
- In 1997 it was the first British retailer to make a pre-tax profit of over £1bn
- Shortly thereafter results plummeted to a relative-low in 2001 of just 10% what they were a few years before
- Arcadia failed a takeover in 2004; M&S announced a recovery plan and sold off M&S Money to HSBC
- Steve Rowe took over as CEO on 1 February 2016
- Helen Weir, resigned as CFO in March 2018 and Humphrey Singer was appointed in July 2018
- A wave of store closures, management changes and transformation programme followed
- In September 2019, the high-street retailer is demoted outside the FTSE100 for the first time since its inception, over 30 years ago
- Humphrey Singer resigns just 14 months after being in the post; officially left on 31 December 2019 (making that 4 CFOs in the space of 6 years; Alan Stewart, Helen Weir, Humphrey Singer, David Surdeau)
- Eoin Tongue will make that five when he joins in June 2020.
The CFO role
As I’ve said many times before, the role of the CFO is wide and encompassing and the CFO is taking on more and more. It’s a relatively lonely position because of the technical background they possess. At M&S, Singer was officially responsible for “group financial performance, IT, investor relations and data governance.”
Data in a retailer is everything. Managing financial data is one thing across countries and verticals but the operational data from 32 million customers is huge. Ensuring single-version, high-quality data that is well-governed is a role in itself and using this huge volume of data to drive insight is absolutely key to a retailer.
It’s reported that “nothing sinister” happened and Singer’s exit was due to the intensive nature of the restructuring underway. However, he was also seemingly key in the Ocado joint venture and this may have been where he dropped the ball in the eyes of Chairman, Archie Norman.
In order to fund the Ocado deal, M&S issued a £600m rights issue at a significant discount, which ultimately pushed it outside the FTSE100. However, the deal (discussed in more detail below), could well be one of the most significant to maintain relevance in this new digital world.
I will say it again, the role of the CFO is all-encompassing; from financial performance, IT, data, investor relations, analytics, business-wide performance and, as we’ll see below, large-scale transformation programmes. It’s a good reminder to self-assess how far-reaching your own CFO skillset is and how you are going about maintaining relevance.
If you want to read the rest of this article on M&S where I discuss:
🔍 The fine balance between discord and synergies of being a Grocer and Clothing company
📲 The importance of a digital strategy and lessons you can learn
📉 Their fall from grace and out of the FTSE100 for the first time in 35 years
💰 The £750m Ocado deal which could be their saviour
Then you can read it on AccountingWEB here.