A new name might suggest a fresh start but how much difference is it likely to make?
by Brian Gorman
On 4 October 2022, postal service and logistics group Royal Mail announced it had changed its name to International Distributions Services (IDS) and is now listed on the stock exchange with the ticker IDS.
This is in part due to the “intention to have clearer financial separation with no cross subsidy” between the UK postal delivery division Royal Mail and General Logistics Systems (GLS), the group’s international arm, it said in an earlier announcement dated 20 July 2022. This reflects the “increased importance of GLS ”, which delivered, according to chair Keith Williams, a “solid performance in the first quarter [of 2022] compared to the “disappointing” performance of Royal Mail.
According to an article by financial analyst Danni Hewson at AJ Bell, “Royal Mail has been rocked by employee strikes and things are only going to get worse given the timetable for further picket lines throughout October and November. It’s no wonder the group is desperate for the market to understand there is more to its business than simply delivering letters and parcels in the UK.”
Hewson explains that the corporate name change to IDS is in recognition of the increased importance of the overseas arm GLS, “in the hope that people will stop thinking of the business simply as a fleet of red vans and workers in shorts”.
This is not the first time Royal Mail has been at the centre of renaming controversy. Formerly known as the Post Office, the group changed its name to Consignia in 2001. But it became “one of the most ridiculed corporate rebrandings in recent memory”, says an article in Post & Parcel, dated June 2002. The company ditched the Consignia name and renamed itself Royal Mail in 2002.
How much difference does a name change make?
IDS shares have lost 60% in the year to date (as of 6 October 2022), according to London Stock Exchange data.
Fund management company Abrdn has also been a poor stock market performer in recent times, losing more than 40% so far in the year to date (as of 6 October 2022). Previously known as Standard Life Aberdeen, formed from the merger of Aberdeen Asset Management and Standard Life in 2017, it became Abrdn in April 2021, dropping the Standard Life part of its name. However, the name Abrdn left many observers baffled. Although it appears to simply eliminate some vowels from the name Aberdeen, it is meant to be pronounced the same way, according to the name-change announcement.
There is little evidence that name changes themselves make much difference to a company’s fortunes, either way. An article in The Herald by Scott Wright sets out some of the issues Abrdn is facing, such as investors pulling money from its funds, and how this is affecting its share price.
Facebook goes Meta
In 2021, Facebook changed its name to Meta. The name change “reflects the company’s growing ambitions beyond social media”, according to an article on CNBC by Salavador Rodriguez.
The name, “based on the sci-fi term ‘metaverse’,” describes Meta’s “vision for working and playing in a virtual world”, says Rodriguez. However, he points out that the rebranding came “amid a barrage of news reports … after Frances Haugen, a former employee turned whistleblower, released a trove of internal company documents to news outlets, lawmakers and regulators”.