The Times - UK (2020-08-07)

the times | Friday August 7 2020 2GM 41

Business

of its 1,000 shops carrying its full line of

products. Even the company’s chair-

man had reservations about whether it

was possible to cook a meal from

scratch with M&S’s ranges, and whe-

ther they had sufficient basic ingredi-

ents such as herbs and spices. “Archie

would ask about a product, and I’d say

we already sell that,” Mr Machin says.

M&S has gone through its and Wait-

rose’s ranges on Ocado and used cus-

tomer data to work out which ones it

needed to replicate. A poll of 250 Ocado

shoppers by HSBC analysts last year

showed that a quarter believed M&S’s

range of groceries was not adequate.

“We had some shortfalls in the

portfolio,” Claire Hodgson, an M&S

product developer, says. “We looked at

everything from our entry price range

of jams and orange juices to our Best

Ever and Gastro Pub range. We want to

make the customer experience as

seamless as possible.”

M&S also had to introduce larger

pack sizes of basic ingredients such as

chopped tomatoes, cheddar cheese and

rice, while launching 150 new organic

products and improving its vegan, lac-

tose-free and wheat-free ranges. The

ranges, which started to appear on Oc-

ado’s website this week, have also been

priced to match, or be cheaper than,

Waitrose’s competing products.

Melanie Smith, 46, chief executive of

Ocado Retail, is aware of a possible

backlash from Waitrose loyalists: “I

even had a group of friends, mums in

Chiswick, say ‘how dare you do this to

me?’, but I’ve now won them round,

particularly on our organic and gluten-

free range. This will recruit a whole new

generation of shoppers to M&S.”

There are some M&S customers in

Cornwall, Scotland and the north of

England who will be unable to buy

M&S products online when the tie-up

launches as Ocado does not cover

those areas, but the companies have

plans to build more warehouses in addi-

tion to the three under construction.

The boom in online shopping means

that M&S investors have stopped com-

plaining about the price it paid for the

venture. But the next few months will

be critical in proving whether the Oca-

do deal was an expensive mistake — or

the price of saving M&S.

tomorrow

Waitrose gets set to fight back

News Corporation has reported a

22 per cent fall in revenue to $1.92 bil-

lion, primarily driven by the impacts

related to Covid-19 and the sale of News

America Marketing.

The media company, which among

other publications owns The Wall Street

Journal, The Australian, The Sun, The

Times and The Sunday Times, made a

fourth quarter net loss of $401 million,

which includes non-cash impairment

charges of $292 million and higher

restructuring costs due to the pan-

demic, compared with a loss of $42 mil-

lion in the same period last year.

In its book publishing section, earn-

ings before interest, tax, depreciation

and amortisation grew by 9 per cent,

partly as a result of the strong perform-

ance in digital revenues, which rose

26 per cent and represented 29 per cent

of its consumer revenues. Move, the

operator of Realtor.com, increased its

profit contribution in the fourth quar-

ter and had record traffic in June with

30 per cent growth in unique users.

In the quarter, Dow Jones had record

average subscriptions of 3.8 million to

its consumer products, led by 28 per

cent growth in digital-only subscrip-

for rival broadcasters. Group revenues

fell 17 per cent to £1.2 billion in the first

half, sending underlying profits down

50 per cent to £165 million. Pre-tax

profits fell even more sharply, from £143

million to £15 million due to an £89 mil-

lion exceptional charge. ITV had to re-

duce the carrying value of its sports

rights due to the pandemic and spent

£9 million on making production facili-

ties safe for staff to return to work.

As expected, the company decided

against an interim dividend. Its shares,

for dynamic change of image

1950 1970 1980 1990 2000 2010 2020

First retailer to

launch ready-meals

with the chicken kiev

1979

The FTSE 100 begins trading

with Marks & Spencer the fifth

largest British listed company

1984

First British retailer

to make a pre-tax

profit of more than

£1 billion

1998

Agrees £750

million deal

with Ocado

2019

Cancels

dividend

after

coronavirus

crisis drags

on profits

and sales

March

2020

New chief

executive Steve

Rowe vows to

fix the business

2016

Sir Philip Green

withdraws takeover

offer in wake of

board opposition

2004

Preparing for launch day

Bosses at M&S have set

up an “Ocado

readiness” team, which

has remained focused

on the online launch

(Ashley Armstrong

writes).

The retailer’s product

development team

conducted 42 range

reviews of M&S food to

ensure that they could

offer a match for, or

beat, Waitrose’s goods

and avoid disappointing

customers. M&S has

introduced bigger bags

of vegetables, and even

copied Waitrose’s

mushroom, spinach and

garlic pizza, which

Ocado’s data showed

was popular.

M&S has launched

750 new products and

matched prices against

Waitrose ranges.

Ocado has ensured

that its warehouse grid

systems have logged in

every new M&S item

with 75 attributes,

including expiry date,

barcode, weight, size,

photo and temperature,

so that it can be found

quickly by its robot

pickers. Over the past

two months M&S has

started transferring

lorries of its longer-life

products, such as pasta

and tins of tomatoes, to

Ocado’s warehouse to

ensure that its products

will be ready to be

delivered at 6am on the

first day of the launch.

Over the August bank

holiday Ocado will be

donating leftover

Waitrose stock, marking

the end of their near 20-

year relationship.

Digital growth cheers

News Corp despite loss

Robert Miller tions, including 23 per cent growth in

digital-only subscriptions at The Wall

Street Journal.

Robert Thomson, the chief execu-

tive, said: “The resegmentation of News

Corp is a fulfilment of our pledge to

make the company more transparent

and its potential more obvious. We have

taken action to reduce costs, and the

benefits of those cuts will be felt in com-

ing quarters. We have also launched a

shared services programme that we

believe will transform the company, by

centralising many of our functions.”

For the full financial year News Corp

reported an 11 per cent fall in total reve-

nues to $9.01 billion while it made a net

loss of $1.55 billion, compared with net

income of $228 million in the previous

year. This reflected $1.69 billion of non-

cash impairment charges, primarily

related to Foxtel and News America

Marketing.

ITV’s profits fell by 90 per cent in the

first half of the year after the broadcast-

er shut down most of its productions

and suffered the steepest advertising

fall in its history.

Advertising income fell 43 per cent in

the second quarter as large companies

reduced marketing budgets during the

shutdown, Britain’s largest free-to-air

TV company said. At its studios

business, sales slid 17 per cent in the first

half after it suspended filming on

several popular programmes.

Dame Carolyn McCall, chief

executive, said the Covid-19 crisis had

been “one of the most challenging

times in the history of ITV”.

However, she said its advertising and

production business had started to pick

up, although the outlook remained too

uncertain to provide a forecast for the

current quarter.

“We are seeing an upward trajectory

with productions restarting and adver-

tisers returning,” she said. Consumer

goods makers, entertainment compa-

nies and some retailers had increased

spending last month.

ITV plc was formed in 2004 through

the merger of Granada and Carlton and

earns about half its revenues from ad-

vertising. The rest comes from the

studios division, which produces pro-

grammes both for its own channels and

ITV suffers advertising switch-off

Simon Duke Technology Business Editor which have halved in value since

March, initially fell more than 4 per

cent yesterday before recovering to a

gain of 2½p, or 3.9 per cent, at 63¼p.

ITV enjoyed a jump in viewer num-

bers during the lockdown, up 4 per cent

over the period. However, it was unable

to reap the benefits as many advertisers

axed marketing campaigns. It had to

suspend many productions, although

filming resumed at leading soaps such

as Coronation Street and Emmerdale.

About 230 ITV productions were af-

fected by Covid-19. It was able to con-

tinue shooting some shows, including

The Graham Norton Show for the BBC.

Last year ITV launched Britbox, a

streaming TV service, in partnership

with rival UK broadcasters, including

the BBC. Subscriptions were “ahead of

target”, ITV said. It is hoped that the

app will receive a boost from the launch

of the satirical show Spitting Image as a

Britbox exclusive.

ITV put about 1,000 staff on fur-

lough, mainly at its production division,

of whom 300 have yet to return to work.

Dame Carolyn, 58, said ITV had saved

less than £10 million by furloughing

workers and that the company would

not return the money to the Treasury.

However, she said ITV would not

claim the £1,000 bonus that the

government is offering to companies

for each furloughed employee who

remains on their books in January.

Dominic Cummings will feature in the

new Spitting Image series on Britbox

$9bn

Full-year revenues at News

Corporation, down 11 per cent

Source: News Corporation