Splashing out

23 August 2017 By Liam Proud Follow @liamwardproud

The ad group cut its 2017 net sales guidance, blaming lower spending by consumer-goods giants which make up about a third of revenue. Boss Martin Sorrell reckons this will reverse. The danger is that zero-based budgeting and shareholder activism make frugality the new normal.

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WPP on Aug. 23 cut its forecast of full-year like-for-like net sales growth to between 0 and 1 percent, from a previous forecast of 2 percent. The ad group cited “pressure on client spending in the second quarter particularly in the fast moving consumer goods or packaged goods sector”.

Like-for-like net sales growth – which strips out the effects of currency moves, acquisitions and services for which WPP bills clients on behalf of third parties – was 3.1 percent in 2016. In the first seven months of 2017, like-for-like net sales shrank by 0.8 percent, the company said on Aug. 23.

WPP shares had fallen by around 10.2 percent to 14.30 pounds by 09:15 BST.

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