Financial news affecting next and Mark’s and spenders financial statements

From the year 2014 up to 2018, there were several economic news that were released which had an impact on the financial statement of the corporation. This information affected the overall performance of the corporations and their profitability as follows:

• In 2014, M&S boss indicated that trendier styles were assisting the corporation to get new clients. Most of British women feel in love with the entity. It had a positive impact on the financial statements of the business as it could assist in increasing the firm’s profits (The Guardian,2014).
• Marks and Spencer reported its first increase in annual profits in 2015. Analysts observed that the company’s profits rose by a margin of 6.1%. It eventually increased the earnings before tax of the company during that year.
• In 2016, the corporation’s shares declined by a significant margin after UK high street retailer announced its intentions of reviving its apparel business. It reduced the overall profits of the company during that year (BBC NEWS, 2015).
• In 2017, the retailer experienced a 64% decline. This was because of the decline in clothing sales and the firm’s decision to open a new food store. The sales also remained stagnant during the same period. Estimates indicate that the assets of the company could be sold to pay its debts because the entity did not make any profits.
• The company’s CEO further disclosed that like-for-like sales reduced by 1.9% in the UK. It cut the retained earning section that declined significantly in the corporation’s financial statements (BBC NEWS, 2017).
• It is also evident that Marks restructuring costs surpassed £400m. The entity is now selling its items at a full price to win itself off promotions. The measure can assist to improve the overall profitability of the corporation in the short-run.
• The company also gave out some trade discounts to its customers with the aim of increasing sales. As a result, this had the potential of increasing the net profit of the company in the financial statements (The Guardian, 2015).
• In 2018, Marks and Spencer witnessed a significant decline in the annual profits of the corporation. During this time, the firm incurred store closure costs and a deterioration in clothing sales. It affected the financial statement as it could lead to a decline in gross profit (Thomas, 2016).
• Additionally, the company’s profits before tax decreased by 62% to £66.8m after incurring restructuring costs that amounted to £514.1m.
• The firm also anticipates incurring another £150m on closure costs. One of its home stores and core clothing is expected to end its operations in less than four years. The step has the potential of reducing the assets of the corporation on its financial statements (Hendriksz, 2018).
• Steve Rowe who is the company’s CEO disclosed that the main structural changes affected the retailer as most of the sales transferred to online platforms.
• The retailer was also expected to close more than 100 high-street stores which sell food, and food by 2022. This has the potential of reducing the retained earnings of the company in the future and the overall profits of the business (Bye, 2010).
• Moreover, the firm might experience severe financial challenges in the future. It is because of its decision to close some of its revenue sources. Therefore, its profits will also decline significantly.

References

BBC NEWS, (2017). M&S annual profits fall by 64% as revamp costs bite. [Online]  Available at https://www.bbc.com/news/business-40025393. [Accessed 15 Feb. 2018].

BBC NEWS, (2015).Marks and Spencer sees first profit rise for four years.[Online]  Available at:https://www.bbc.com/news/business-32800614.[Accessed 15 Feb. 2018].

BBC NEWS,(2015).Marks & Spencer shares jump on clothing sales increase.[Online]  Available at:https://www.bbc.com/news/business-32157686.[Accessed 15 Feb. 2018].

BBC NEWS, (2017). M&S annual profits fall by 64% as revamp costs bite. [Online]  Available at: https://www.bbc.com/news/business-40025393. [Accessed 15 Feb. 2018].

Britton, A. and Waterston, C. (2013). Financial accounting. Harlow: Financial Times Prentice Hall.

Bye, E. (2010). Fashion design. Oxford: Berg.

Hendriksz, V. (2018).Marks & Spencer sees profits before tax declined 5.4 percent for FY18.[Online]  Available at:https://fashionunited.uk/news/business/marks-spencer-sees-profits-before-tax-decline-5-4-percent-for-fy18/2018052329792.[Accessed 15 Feb. 2018].

The Guardian, (2014).M&S profits dip for third year as retailer fails to reach sales target.[Online]  Available at:https://www.theguardian.com/business/2014/may/20/marks-and-spencers-profits-dip-m-and-s. [Accessed 15 Feb. 2018].

The Guardian,(2015).Marks & Spencer profits jump for first time in four years.[Online]  Available at:https://www.theguardian.com/business/2015/may/20/marks-spencer-profits-jump-mark-bolland.[Accessed 15 Feb. 2018].

Thomas, N. (2016).Marks and Spencer results – what the analysts say.[Online]  Available at:https://www.ft.com/content/ff4cfa7c-4a1c-3789-a4b7-30b0ad6e0846.[Accessed 15 Feb. 2018].

The Guardian, (2018).Marks & Spencer reports sharp drop in annual profits.[Online]  Available at:https://www.theguardian.com/business/2018/may/23/marks-and-spencer-reports-sharp-drop-in-annual-profits.[Accessed 15 Feb. 2018].

The Guardian, (2018).Marks & Spencer’s clothing sales recover as style focus pays off.[Online]  Available at:https://www.theguardian.com/business/2014/apr/10/marks-and-spencer-clothing-sales-recover.[Accessed 15 Feb. 2018].

Worth, R. (2007). Fashion for the people. New York: Berg.

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