Discuss about the Analysis of Marks and Spencer for Asos and Tesco.
Marks and Spencer has been favourable affected by the external factors such as the political and the legal laws and regulations such as the European Commission’s free trade agreements which have made the product imports much easier and have led to a decrease in the source costs. However, after the outcome of the British EU the sales of the company faced a dip in its last quarter.
During the financial year 2008, the competitors such as the Aldi, Asos and Tesco followed a strategy of the discounting the price while the major focus of the MARKS AND SPENCER was on the qualified products and better customer satisfaction. In case of the M&S the company the company is focused on the social agenda and the sustainability plan of the company (Chandra, 2011). The sustainability and the corporate responsibility have been affected. Thereby the competitor and the bargaining power of the customers in affected by this.
The new technological advancements adopted by the Aldi, Asos is more competitive and caters to the preferences of the customers. The new designs is the ultimate USP of the company while on the other hand the Marks and Spencer kept its attention in improving the existing technology and the designs.
Marks and spencer is losing one of the three of its core clothing and home branches in a dramatic retreat from the streets of the United Kingdom triggers for thousands of job due to the degradation in the performance and the operating cost being higher than the income. In case of the social factor of the external analysis, the company could not perform better and the society is unsatisfied. The pre-tax profits of 573m pound are low as compared to the year 2017 making it the second consecutive year of declining profits. The sales of the clothing and the home products at the established stores are expected to be low by 1.1% and food sales by 0.4% (The guardian, 2018). Therefore from the trends also it can be observed that the company is facing a lot of the financial risks.
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As it can be observed from the trend analysis the operating profit is fluctuating from 946.76 to 911.6 in the year 2018 and 2019 respectively. According to the ratio analysis evaluation, the performance of the company has been lowered. The profitability ratio and other ratios explain that the company is required to make the changes into the strategies to improve the performance.
Stock prices are one of the techniques to forecast the performance and the financial position of the company. An s per the experts and the analysts the median estimate represents decrease in the price of the stock by 4.82%. The earnings growth last year was 77.43% and in the next 5 years it is -3.68%. This suggests the company is facing financial loss. Therefore, the companies are also in a view of shutting the stores (CNN money, 2018).
It’s going to shut the remaining sick stores as the company is already ready to shut 53 international stores, which includes 10 in china, half of the outlets are going to close in France and all of its shops in different cities such as Estonia, Lithuania, Poland, Romania and Netherlands. The profit might be increasing but the fluctuations in price shows a trend that in future also the price going to fall as the company is becoming sick unit. Therefore, for a layman it is advised to sell the shares if the investors are holding.
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CNN money, (2018) Marks and Spencer group PLC [online] Available from https://money.cnn.com/quote/quote.html?symb=MAKSY [Accessed on 30th July 2018].
The Guardian 2018. Marks and Spencer [online]. Available from https://www.theguardian.com/business/2018/may/22/marks-spencer-close-stores [Accessed on 30th July 2018].
Chandra, P. 2011. Financial management. London: Tata McGraw-Hill Education.