Marks and Spencer 2006 Annual Report Download - page 5

www.marksandspencer.com/chiefexecutivesreview2006 03Marks and Spencer Group plc
4.1%
increase in sales
35.1%
increase in pre-tax profits
63.5%
increase in
earnings per share
In 2005/06, we made real progress on
improving our product ranges and started
to tackle our customer service and store
environments. As a result, our performance
improved in what continued to be a tough
and competitive marketplace. However, we
still have much to do to ensure that we
sustain growth in the long term.
Last year, I updated you on progress made
on our three-year plan. Starting in 2004/05,
we tightly controlled costs, reduced stock
commitments, streamlined buying practices
and eliminated bureaucracy, as well as
reasserting our traditional values of Quality,
Value, Service, Innovation and Trust. We
started to drive the business in 2005/06,
concentrating on: product, environment
and service.
Our plan remains unchanged. We will
continue the drive phase in the coming year,
focusing on further improving product and
customer service, while modernising our
stores on a scale unmatched in the
UK. Beyond this, we have begun to
consider opportunities to broaden the
business from 2007.
Clear responsibilities will ensure that we
achieve our goals with pace. The executive
board comprises a team of three. Ian
Dyson, our Group Finance Director, is
responsible for International, IT, Logistics
and Property; Steve Sharp for Marketing,
E-Commerce, Store Design and
Development and our relationship with
HSBC’s M&S Money. I continue to oversee
Buying and Merchandising in addition to my
other responsibilities. We are supported by
a strong team of Business Unit Directors –
Guy Farrant in Food; Kate Bostock in
Womenswear, Girlswear and Babywear;
Matthew Hudson in Lingerie and Sleepwear;
Andrew Skinner in Menswear, Boyswear,
Schoolwear and Children’s Nightwear; and
Steve Rowe in Home and Beauty; working
together with Andrew Moore, who is
responsible for all planning for General
Merchandise. Our store teams are managed
by Anthony Thompson. They are supported
by strong teams in logistics, systems,
marketing and other essential functions.
Our performance last year
Operating margins improved to over 10%
through a continued tight control of costs,
tight management of stock commitments
and better buying. Group profit before tax,
exceptional items and asset disposals rose
35.1% to £751.4m (last year £556.1m).
Total UK retail sales were up 3.4% at
£7.3bn, as Food recorded strong growth
of 7% and General Merchandise remained
broadly level, with Clothing sales flat and
Home seeing a 0.8% increase.
Performance improved progressively
throughout the year. In Clothing, all areas
experienced a difficult first half as we
continued to improve our products, change
buying practices and rationalise our brands.
From the autumn, our sales performance
improved, led by better styling and very
competitive pricing. Food sales improved
across the year, thanks to our renewed
focus on outstanding quality and innovation
and our efforts to tell our customers more
about what makes us different. The
momentum was maintained through
Christmas and the final quarter, when,
importantly, we saw an improvement in
market share by both value and volume.
Chief Executive’s review
M&S performs best when we listen
to our customers. They want
high quality products at competitive
prices, in attractive stores
that provide excellent service.
Stuart Rose
Clothing
42.2%
Food
46.6%
Home
4.5%
International
6.7%
SALES
BREAKDOWN