Financial Performance of Marks & Spencer Group PLC (M&S)
Part A
The main theme of this part of the assignment is corporate reporting and analysis. This part requires you to select a company in accordance with the essential criteria and further guidance provided on Learn Ultra to complete the tasks specified below.
You are required to:
a) Evaluate the company’s financial performance as reported in the Income Statement for its accounting period which ended between 1 July 2020 and 30 June 2021. This period is your primary focus, but you are also required to consider how the company has performed compared to the two preceding accounting periods. You should include copies of the Income Statements within an appendix.
You should explain how the business works and why it performed as it has, through consideration of the factors affecting the company, the strategies it has pursued and the economic and industrial context in which it operates. You should draw on the narrative of the annual report together with relevant notes on matters such as segmental performance and exceptional (non-recurring) items to inform your evaluation.
You are not required to compare this company’s performance with any other company, although reference to market average data, if available, could be relevant. You are not required to evaluate the Statement of Financial Position for any of the years involved, although the statement would be relevant if aspects of it have impacted on company performance e.g., additional debt has increased the finance cost.
(40 marks)
b) Evaluate the use of performance measurement by this company in its annual report for its accounting period which ended between 1 July 2020 and 30 June 2021. You should compare this with the current use of performance measurement by another company operating broadly in the same business sector. You should explore why the two companies have chosen their respective performance measures and how they might aid in the monitoring and improvement of company performance.
It is not necessary for the comparator company to use the same accounting date as your main company, but it does need to be listed on the London Stock Exchange.
You should evaluate:
i) The financial performance measures the companies consider in their annual reports, including investment ratios.
ii) The non-financial performance measures they consider in their annual reports.
iii) How the non-financial performance measures adopted will benefit the companies and their stakeholders.
iv) The overall performance of the companies based on their chosen performance measures (discussed here, in part b) by providing justifications for your choice.
(40 marks)
Essential Criteria for Company Selection
The main company you choose:
1. must be listed on the London Stock Exchange. As an example, this could be from one of the FTSE100 or FTSE250 lists of companies.
2. must have published a full annual report for an accounting period which ended on a date between 1 July 2020 and 30 June 2021.
(Part A word limit: 2900 words)
Financial Information for Managers: Marks & Spencer Group PLC (M&S)
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Financial Information for Managers: Marks & Spencer Group PLC (M&S)
1.0 Introduction
Marks & Spencer Group PLC (M&S) is a retail company based in the United Kingdom and operates in four segments, including UK Food, Clothing & Home, Ocado, and International. M&S is a public company incorporated in the UK under the Companies Act and is registered in England and Wales. Its address office is at Waterside House, 35 North Wharf Road, London W2 1NW (Marks and Spencer, n.d). The UK Food segment includes the UK Food franchise and the UK retail food business offering customers produce, protein deli and dairy, meals, ambient and in-store bakery, hospitality, Food on the Move, and desert and frozen. The UK Clothing & Home retail women, men, and kids' wear, lingerie, and home products via the UK retail stores and online channels. The Ocado segment is the company's share of profit and losses from the Ocado Retail Limited investment. Lastly, the International segment is the company's owned businesses in Asia, Europe, and international franchise operations (Reuters, 2022). M&S is also a major player in its market with an established reputation for expertise and efficiency. The company has 1509 stores, more than 100 websites internationally, and over 70,000 employees serving more than 30 million clients annually (Marks and Spencer, 2022). Like many retailers, M&S has also experienced an adverse economic climate affected by factors such as business closures due to COVID-19 and Brexit. In 2020, the retailer had planned for a slow return of sales, took steps to shore up its finances for 18 months, and scrapped its 2021 dividend due to the COVID-19 pandemic (Partridge, 2020). This paper evaluates Marks and Spencer's financial performance as reported in the income statement for its accounting period ended between 1 July 2020 and 30th June 2021 and the performance measures by the company in its annual report for the accounting period ended between the same period. The paper also compares Marks and Spencer's financial and non-financial performance measures with French Connection Group Plc, a retailer based in the UK, to reveal how these strategies benefit the companies and the stakeholders.
* Financial performance of Marks and Spencer
* How the business works and why it performed as it has
While 2020-2021 was a lost year for M&S's profitability, the retailer was still struggling even before the pandemic. In 2020, the retailer reported that the pandemic crisis would impact its business and further moved to cut 7,000 jobs (Davey, 2021). All retailers in the UK were hit by the pandemic, including Primark, whose annual profit had dropped by 90 percent. While Next had shown greater resilience during the crisis, the company's full-year profit also fell by 53 percent (Davey, 2021). Historically, M&S became the first retailer in the UK to make an annual pre-tax profit of more than GBP 1 billion in 1998 and 2008. Archie Norman, the Chairman, and Steve Rowe, the Chief Execut...