WPP boss Mark Read has promised “decisive action and radical thinking” to turn around the holding company after it reported a sales slump in its latest earnings report.
The marcomms giant’s third quarter revenue was down 0.8% to £3.758bn, and its reported revenue for the first nine months of the year down 1.6% to £11.251bn.
WPP’s like-for-like organic sales also declined 1.5% in the quarter, a trend it blamed on “deteriorating” sales across all sectors except data investment management. Read again singled out the company’s creative agencies, and its North American business, as underperforming.
The company's share price fell 20% in early trading following the disappointing earnings report, in which several significant changes were revealed:
* The board has now officially approved Read’s plans to sell a stake in research arm Kantar.
* Group finance director Paul Richardson has decided to retire from the company and will leave during the course of 2019.
* WPP has cut its full-year revenue guidance and expects sales to be down between 0.5-1% versus a previous outlook of 0.3%.
“Turning around WPP requires decisive action and radical thinking, and our performance in the third quarter of 2018 reinforces our belief in that approach,” said Read, who was named chief executive in September.
“The slowdown primarily reflects a further weakening of the performance of our businesses in North America and in our creative agencies, issues that we highlighted in our interim results.”
Read, who succeeded Sir Martin Sorrell, said the company had “become too complicated” and “been too slow to adapt” to the changing nature of the marketing business.
He pointed to 16 sell-offs under his watch, and the mergers of VML and Y&R and a number of healthcare agencies, as evidence that his “restructuring” strategy is taking effect. But he warned that it would “take time” to improve the organisation’s fortunes.
“WPP has grown into a large and complex organisation, with many strengths, but also challenges. It will take time to improve our performance and we are realistic about the short-term issues that we face.
"Our top 150 leaders met in Brooklyn two weeks ago to discuss our plans and came away excited by the future, united by a new sense of common purpose, and committed to work together to build a new WPP."
Read will provide a full strategy update in December.