WPP Sees Full Year Sales Drop on New Lockdowns

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WPP Plc Chief Executive Officer Mark Read said the company believes that the worst of the pandemic is behind it even as the coronavirus-related lockdowns that hammered the advertising industry this year return.

  • Full year, like-for-like revenue, excluding pass-through-costs, will be “within the range of analyst expectations” in 2020, the company said in a statement on Thursday. WPP defined that as a decline of between 8.5% and 10.7%.
  • “We did say that we thought the second quarter would be the toughest of the year, and that remains the case, though we are cautious of the outlook for Q4 given the increasing lockdowns,” Read said in an interview. “We feel fairly confident the worst is behind us.”

Three-Year Plan

  • Third-quarter revenue excluding pass-through costs declined 12% to 2.4 billion pounds ($3.1 billion) from a year earlier, the London-based company said. The decline was 7.6% on a like-for-like basis.
  • The company will update the market on its three-year plan, begun in 2018, at a shareholder meeting in December, Read said. WPP plans to “accelerate the strategy we outlined two years ago.”
  • After streamlining the company “now is the time to focus on growth” including “selective” acquisitions, he said. WPP wants to focus on digital technology, e-commerce and marketing technology as well as more traditional creativity-focused businesses.

Further Insights

  • WPP is on track to hit the “upper end” of its cost-savings target of 700 million pounds to 800 million pounds, the company said in the statement.
  • Ad spend in the usually busy holiday shopping season is in doubt as retailers in the U.S. and Europe brace for further lockdowns and potentially fewer consumers in stores.
  • Rivals Publicis Groupe SA and Interpublic Group of Cos., which reported results earlier, warned that the outlook for this quarter was murky given the continuing effects of the pandemic.

Market Reaction

  • WPP fell 2.4% at 8:25 a.m. in London. The stock has dropped 44% this year.

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