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04
MARKS AND SPENCER GROUP PLC
STRATEGIC REPORT
OVERVIEW
At the end of the fi nancial year Marc
Bolland retired as Chief Executive. He was
succeeded by Steve Rowe at the beginning
of April. I would like to thank Marc for
leading the company through a period
of necessary modernisation over the past
six years. Much essential work has been
done during Marc’s tenure to build our
infrastructure and capabilities, particularly
in support of the online and digital
elements. We are a more capable company
with signifi cantly improved digital, design
and sourcing skills in Clothing & Home
and industry leading performance and
outstanding innovation in Food. M&S is
now better equipped to meet today’s
customer needs.
The start of Steve’s tenure in April
opened a new chapter which will see us
continue to accelerate the pace and scale
of change across the business. The focus
will be on execution and implementing
the actions required to complete the
transformation of M&S’s infrastructure
and its business to compete e ectively
in a modern, digital age.
A NEW CHAPTER
Steve has a deep understanding of M&S,
having worked at the company for over
25 years. He has been a Board member
since 2012 and has a proven track record of
delivering results. He also understands the
need for change. It is this insider knowledge
coupled with an appetite for transformation
that makes him uniquely qualifi ed to lead
our business forward.
Steve is straightforward, authentic and
decisive. These are qualities that will
carry our people with him. These qualities,
together with his clear focus on our
customer, simplicity and teamwork, are
the reasons Steve was chosen to lead the
business. Under his leadership, our aim is
to again become as distinctive in Clothing
& Home as we now are in Food.
PERFORMANCE
Our performance during the year was
mixed. We delivered a good performance
in Food and a substantial improvement
in our Clothing & Home margins, but
Clothing & Home sales were not
satisfactory. The overall result is that
underlying profi t before tax rose by 3.5%
to £684.1m, although due to non-
underlying items of £200.8m, statutory
profi ts were down 19.5% to £483.3m.
In Food, we had another strong year,
despite the market remaining extremely
competitive. Customers continue to be
drawn to our distinctive o er. They love
our high levels of newness and innovation
and our emphasis on convenience. As
planned, we were able to grow the business
profi tably, including opening 75 new Simply
Food stores, which are performing strongly.
Our Clothing & Home business
underperformed. Although it delivered
signifi cant margin gains due to better
design and sourcing skills, our sales
performance was unsatisfactory.
Steve’s number one priority is to return
Clothing & Home to sustainable, profi table
growth. With his direct control of the
division and his detailed understanding of
the issues it faces, this underperformance
is being addressed as a matter of urgency.
M&S.com outperformed the market and
it continues to reap the benefi ts of the
investment made over the last few years.
Performance against all metrics improved
during the year. Our Castle Donington
automated distribution centre has
signifi cantly strengthened our
infrastructure and its performance this
year exceeded our plans. Over the year
we saw sales through mobile and tablets
grow strongly as customers’ shopping
behaviour continues to evolve.
Our International business faced
signifi cant headwinds due to currency
fl uctuations, the slowing global economy
and geopolitical unrest alongside some
operational challenges. Although we
saw good growth in India, our business in
Europe is not producing satisfactory
returns. We are looking at every part of
our International business to make sure
our strategy remains relevant.
VALUES AND PLAN A A
Our values of Inspiration, Innovation,
Integrity and In Touch are as important
to us as ever. The work we do in
communities and the steps we take to
help disadvantaged people into work are
daily proof that these values are authentic.
This year, over 1,000 of our employees
took part in Spark Something Good;
a co-ordinated series of community
and charity action days in cities across
the UK. Among the many charities we were
delighted to support this year was Style
for Soldiers, an organisation that provides
bespoke outfi ts for wounded servicemen.
Nine years after its launch, Plan A continues
to infl uence the decisions we make.
Our work with our suppliers and other
We are focused on strengthening
our position as a modern, profi table business
rooted in fulfi lling the needs of our customers.
ROBERT SWANNELL CHAIRMAN
OUR BUSINESS
CHAIRMAN’S
STATEMENT
PAID ON 8 JANUARY 2016 TO BE PAID ON 15 JULY 2016 EXCLUDING SPECIAL DIVIDEND
6.8p 11.9p 18.7p
INTERIM FINAL TOTAL DIVIDEND FOR 2015/16