Doom and Gloom engulfs old high street names
Paragraph 1: What is the problem with Britain’s high street names at the moment? Yesterday’s profits warning from Marks and Spencers is the fallen giant’s second year. The much-vaunted autumn fashion ranges have failed to woo shoppers who have found the weather too warm to buy woolly jumpers and winter coats.
Paragraph 2: Storehouse, the Bhs and Mothercare retailer, is no stranger to profits warnings itself, and produced another yesterday saying losses could hit £20m in the first half. Having already lost its chief executive in the spring, the group is again considered a takeover target.
Paragraph 3: The list of high-profile casualties does not end there. Sainsbury’s is still losing ground to Tesco and Asda and seems unsure of which way to turn. Boots shares have lost a third of their value since January on the threat of a supermarket price war. And WH Smith has yet to prove it can cope with the strategic challenge posed by Internet sales of books and CDs.
Paragraph 4: These retailers, many of whom were pre-eminent in their sectors at the start of the decade, now face a far less certain as the Nineties draw to a close.
Paragraph 5: What does it all mean? Are we witnessing the start of a major change on the British high street, where the top names of yesteryear are gradually replaced by younger, nimbler competitors. Or can the problems be attributed to short-term, company-specific issues such as management failure or the odd, seasonal buying mistake?
Paragraph 6: There are certainly company-specific issues in all the above cases, and WH Smith has recovered from its weakest point of couple of years ago. But both M&S and Sainsbury’s failed to notice how rapidly their markets were changing and have been heavily punished for management lethargy. Storehouse under-invested in both Bhs and Mothercare, and Keith Edelman, the former chief executive, paid for consistent under-performance with his job....
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