The Times - UK (2021-11-11)

48 Thursday November 11 2021 | the times

Business

M&S, Asos, Boohoo rebased

Sparks fly again

January 2020 April July October

only more discounts in return. Sparks

has been spruced up and has 13.9 mil-

lion cardholders. It has also revamped

its app, which is now slick, takes alter-

native payment methods and has an

easy returns system that could almost

fool someone into thinking that M&S is

an online retailer.

Crucially, the business has become

quicker, reducing lead times by nine

weeks, giving it a better chance of

clothes still being in fashion by the time

they reach its stores.

Food has long been seen as the

crowning glory of M&S, but when

Rowe took over its reputation for

luxury treats was looking wobbly as

Aldi and Lidl, the discounters, were sell-

ing bargain basement steak and king

saying that “introducing a US-style

class action could have put a chill on

investment and a detrimental impact

on firms across the economy without

improving access to justice for the

majority of consumers”.

However, Rocio Concha, a director at

Which?, said the judgment was “dis-

appointing news for millions of con-

sumers who may now struggle to get re-

dress for potentially having had their

personal data exploited by Google”.

Lawyers acting for corporations said

that the ruling would be a relief. “It

should reduce the risk of opt-out class

actions following a data breach or other

data protection law infringement,” Gail

Crawford, a partner at Latham &

Watkins, said.

Lloyd had claimed at the Supreme

Court that Google had bypassed priva-

cy settings on Apple iPhone handsets

between 2011 and 2012 and had used

the data gathered to divide people into

categories for advertisers. Google’s

lawyers responded that there was no

suggestion that private information

had been disclosed to third parties.

continued from page 47

Legal bid over iPhone data fails

Any celebrations at Google after the

company achieved a victory in the UK

Supreme Court were tempered yester-

day by a legal setback in Europe over a

a multibillion-euro competition fine.

While the Supreme Court blocked a

planned £3.2 billion lawsuit against

Google over allegations that the group

had unlawfully tracked the personal

information of millions of iPhone users,

a branch of the European Court of

Justice rejected the company’s appeal

in a separate case.

Three years ago the European

Commission fined Google €4.34 billion

after deciding that the company had

favoured its price-comparison shop-

ping service to give it an unfair advan-

tage against smaller European rivals.

The court in Luxembourg dismissed

Google’s appeal and ruled that the

commission had been correct in finding

that the company’s “practices harmed

competition”. It also rejected Google’s

argument that the presence of mer-

chant platforms showed there was

strong competition. As part of its ruling,

the court upheld the fine, with the

judges noting the seriousness of the

breach and the fact that “the conduct in

question was adopted intentionally, not

negligently”.

Google said that it would review the

judgment and noted that it had

complied with the commission’s order

to ensure a level playing field for rivals.

The company did not comment on

whether it would appeal against the rul-

ing to the full Court of Justice.

The commission welcomed the

ruling, saying that it would provide

legal clarity for the market. In a

statement, it said that it would “con-

tinue to use all tools at its disposal to

address the role of big digital platforms

on which businesses and users depend

to, respectively, access end users and

access digital services”.

The judgment could revive dormant

investigations in Brussels that have

been triggered by complaints from

Google’s rivals, such as Yelp, another

American search engine, and websites

that specialise in the travel, restaurant

and accommodation fields. Margrethe

Vestager, the European competition

commissioner, has opened similar

investigations into the activities of

Amazon, Apple and Facebook.

Thomas Vinje, a partner at Clifford

Chance, a City law firm, who advises

several of Google’s rivals, said that

Vestager should expand her investi-

gation into other areas. He said that

yesterday’s judgment had given the

European Commission “the ammuni-

tion it needs to tighten the screws on

Google in other areas where it is

throwing its weight around, like in on-

line advertising, app stores and video

streaming”.

Google has incurred about €8.25 bil-

lion in European competition fines

over the past decade.

Jonathan Ames Legal Editor

Google loses appeal against EU fine

“It’s quite nice to be making some

money again,” Archie Norman quipped

as he surprised the market with a

second profit upgrade in three months.

“Nice” was something of an under-

statement for the Marks & Spencer

chairman. At long last, the retailer has

turned a corner, with sales and profits

improving in both its clothing and food

divisions and investors, analysts and

bosses agreeing that M&S is in its best

shape for decades.

The task hasn’t been easy. Norman,

67, has been set on turning the 137-year-

old retailer “from a national institution

into a business”. To do that, he and

Steve Rowe, his chief executive since

2016, have had to cut out multiple

layers of bureaucracy and undo

decades of quick-fix mis-

steps. Until now, there

had been little to be

excited about and it seemed

that recovery was as far

away as ever.

Not that this is a

case of “job done” just

yet. Rowe, 54, is resisting

any victory laps, privately

marking the business a

four out of ten in terms

of where he believes

it can be. M&S

shares are about

35 per cent lower

than when he took

over. But most of the essential work re-

quired to fix the business appears to

have been completed. For example,

M&S turns

corner on

long road to

redemption

Ashley Armstrong Retail Editor weaning M&S off discounting has

barely been given any attention, but in

2019 more than £100 million of its sales

were discounted in its friends and

family promotions.

“The day I took over, M&S was on

discount 364 days a year,” Rowe said.

Stripping them out has boosted full-

price sales and profits, although they

could not be ripped out all at once with-

out hurting the business.

Another task has been fixing its

Castle Donington clothing warehouse,

which cost £212 million to build and

another £39 million to get right after its

systems kept crashing and clothes fell

off conveyor belts. Overhauling those

operations has meant the depot has

been able to support a 60 per cent in-

crease in online clothing sales. Indeed,

M&S’s online growth is impressive,

particularly when many

observers had consigned the

company to the yesteryear of

retailing.

Today, improved fash-

ion ranges are winning

over younger shoppers,

while older customers are

more comfortable making

purchases online since lock-

downs gave them little alter-

native. M&S has 9.6 million

active online customers,

with online accounting for

£1.1 billion sales in the first half

of its financial year, more than

Boohoo — a specialist — made

online in six months.

M&S’s decision to stock third-

party brands has helped to attract

new customers. They generated

£53.7 million of sales — 3.5 per

cent of its sales mix — over the

past six months, but more importantly,

its collaborations have created a buzz

around the business. On Instagram,

M&S is behaving like an online retailer,

targeting trendy mothers and adult

daughters rather than repeating previ-

ous cringeworthy attempts to chase

young clubbers with gold hotpants.

All these things are paying off as

M&S topped YouGov rankings on high

street retailers based on quality, value,

satisfaction and reputation, higher

than the likes of John Lewis, Ikea,

Waterstones and Boots.

Online growth has been helped by a

long-awaited overhaul of M&S’s Sparks

loyalty programme, which had become

almost entirely meaningless as cus-

tomers racked up millions of points and

Percy Pig features in the retailer’s

Christmas advertising campaign

1

Three out of every four current

account customers who were

denied a refund for fraud were

treated unfairly by their bank and

should have got their money back,

according to ombudsman data.

Thousands of fraud victims every

year are not being reimbursed,

with banks ignoring their own

code of conduct on refunds. Page 2

2

The boss of Marks & Spencer

said that the “hard yards” of

its turnaround were paying off

as the retailer unexpectedly

boosted profit expectations by

more than 40 per cent. On the

back of a surge in food sales and

improvements in its clothing

business, the 137-year-old

company said that its headline

profits would be in the region of

£500 million, substantially more

than had been anticipated in the

City. Page 47

3

Consumer prices in the

United States rose at their

fastest pace in more than

three decades last month as

inflation accelerated amid supply

shortages and robust demand.

Inflation rose to 6.2 per cent in the

year to October, up from 5.4 per

cent in September. Page 47

4

Google has fought off plans

for a £3 billion class-action

lawsuit over allegations that it

unlawfully tracked the personal

information of iPhone users. The

UK Supreme Court dismissed a

claim by a consumer rights activist

that it secretly used the data of

more than five million users by

bypassing privacy settings. Page 47

5

The largest initial public

offering in the world this year

made a spectacular start as

shares in a company touted as a

future rival to Tesla surged by as

much 53 per cent in New York.

6

European banks are set to be

able to use City of London

clearing houses beyond next

June to reduce market disruption.

The EU’s financial services chief

said the bloc planned to extend

the deadline for companies to

move euro-denominated contracts

out of the City. Page 50

7

ITV predicted its advertising

revenues would surge to an

all-time high this year thanks

to a jump in spending on online

marketing and the reopening of

the economy. Shares in the

broadcaster rose by the largest

amount in 11 years. Page 52

8

The advertising group

launched by Sir Martin

Sorrell is to increase

investments to drive its growth, a

plan that will weaken S4 Capital’s

short-term profit margin and hit

its share price yesterday. Page 53

9

Older drinkers are returning

to pubs more slowly than

younger customers, according

to JD Wetherspoon. There has

been a big fall in sales of draught

ales and stouts, but sales of

cocktails were up. Page 55

10

Factory gate inflation in

China has hit a 26-year

high as makers of

components and finished goods

pass on rises in the costs of energy

and raw materials. Producer prices

increased by 13.5 per cent in the

year to October, up from 10.7 per

cent in September. Page 55

Need to know

€8.25bn

Total European competition fines that

Google has paid in the past ten years