Marks and Spencer 1998 Annual Report Download - page 4

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Building on our experience in home delivery,
at the end of the year we launched our first mail
order clothing catalogue as a pilot scheme. This will
complement our store-based offer and provide a
valuable service for busy people and those living in
remote areas.
We are rapidly developing a comprehensive,
in-depth range of items for the home. A new stand-
alone store in York allowed us to develop a display
format appropriate to this kind of merchandise
which will be repeated within the larger stores.
In a year during which competition among
the major supermarket chains became even more
intense, our food sales increased by 3% , adjusted
for Easter trading, despite price deflation in several
key areas.
Product development, backed by the highest
quality and safety standards, remains the lifeblood
of our food business, with one quarter of the
product range new each year. This rate of
innovation helps us to develop new ranges, based
on our distinctive offer of speciality foods,
to maintain our position in the market place. We
are introducing in-store bakeries, rear-service
delicatessen, hot food counters and more butchers’
shops into all our larger stores to differentiate
The effect of the high value of the pound on our
results in continental Europe, the trading and
economic collapse across the Far East and the cost
of the Budget changes on funding the Company’s
pension scheme were broadly offset by an
exceptional VAT credit of £53m.
The Group has embarked upon an expansion
plan of unprecedented magnitude in the United
Kingdom, continental Europe and the Far East.
During the year we added 620,000 sq ft of selling
space worldwide, an investment of £740m. O ver
the next two years we will add a further 2.4m sq ft
– 1.5m sq ft of which will be in the UK – bringing
our UK selling space to 12.5m sq ft.
UK retail turnover increased by 5.5% to
£6.7bn with sales of clothing, footwear and gifts
increasing by 8.1% to £4.3bn including VAT,
reflecting an increase in our already leading clothing
market share. Relentless pursuit of product
development means that today we can offer our
customers a more extensive choice than ever.
CH AIRM AN’S STATEMEN T
Sir Richard Greenbury
I am pleased to report a further increase in profits and a year
of good sales progress, particularly in clothing and home
furnishings. Group turnover rose by £401m (+5.1% ) to
£8.24bn and pre-tax profits by £66m (+6% ) to £1.17bn.
The final dividend recommended by the directors is 10.7p
per share, making an ordinary dividend of 14.3p per share,
an increase of 10% , reflecting the underlying financial
strength of the business and our confidence in the future.
THE THREE-YEAR PROGRAMME OF
£2.2BN WILL ADD SOME
3.0M SQ FT BY MARCH 2000
2