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What does it take to turnaround a company gripped with mid-life crisis? For Marks & Spencer, the British retail giant, a change in culture to take away the complacency, a revamp of products range and a return to its roots, did the trick. By focusing on its core competence and market while broadening its competitive perspective, the company is back to its profitable days.
For years, Marks & Spencer ruled the retail roost, and reveled in profits quarter-after-quarter, until some bad decisions, complacency and boardroom battles took the company away from its glorious days. In January 2000, after a continuous decline in share prices and earnings, Luc Vandevelde, who had previously worked with France-based Kraft Foods and Promodes, was taken in as chairman to revive Marks & Spencer flagging fortunes. And what the Belgian did to the British supermarket chain was no waving of the magic wand. Instead he followed the tried and tested approach to turnarounds, but with a sense of urgency and heightened sensitivity towards competition, which was something new to the retail chain.
In May 2000, he actually staked his reputation on successfully enlivening Marks & Spencer, promising to resign if he doesn't restore financial health to the company within two years. Well, Vandevelde gets to keep his job as after some years of elusion, the profits are back at Britain's cherished yet troubled retailer. Shares of Marks & Sparks, as the 119-year-old department store chain is affectionately known, have nearly doubled in value in the past 12 months and profits have risen 30 percent in the last year. This is the first time since 1999 that the company has clocked an increase in profits for the year as a whole. For the year to March 31, pre-tax profits rose from £494.8 mn to £646.7 mnabove market expectations. So, what had gone wrong at this former icon of British retailing? And what did Vandevelde do to set things right?
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