Marks and Spencer 2001 Annual Report Download - page 3

Group structure
The Group reports the results of three operating divisions:
UK Retail
International Retail
Financial Services
A fourth division, Property, manages the internal financial
dynamics between the Group’s interests as owner of property
on the one hand, and as operator on the other hand. This is
separately reported for internal purposes only.
The UK Retail division, the largest of the operating divisions,
is itself sub-divided into seven business units, each representing
a defined area of merchandise:
Womenswear
Menswear
Lingerie
Childrenswear
Beauty
Home
Foods
The first six business units are reported as ‘General’, and footage
is allocated between them depending on demand and seasonal
factors. The space allocated to the largest single business unit,
Foods, is relatively inflexible.
Rent is charged internally to the UK Retail division based
on the estimated rental value of the space occupied. The same
occupancy costs are carried in the management accounts for the
seven business units within UK Retail. Profit and loss accounts
are also prepared for internal purposes at store level based on
this market rent.
Group summary
2001 2000
52 weeks 53 weeks
Summary of results £m £m
Turnover (ex VAT) 8,075.7 8,195.5
Operating profit (before exceptional charges) 467.0 543.0
Exceptional operating charges (26.5) (72.0)
Operating profit (after exceptional charges) 440.5 471.0
Non-operating exceptional charges (308.9) (67.7)
Interest 13.9 14.2
Profit on ordinary activities before tax 145.5 417.5
Basic earnings per share 0.0p 9.0p
Adjusted earnings per share 11.4p 13.2p
Dividend per share 9.0p 9.0p
Group turnover
UK Retail 6,293.0 6,482.7
International Retail 1,419.6 1,348.2
Financial Services 363.1 364.6
Total 8,075.7 8,195.5
Profit on ordinary activities before tax of £145.5m (last year
£417.5m) is shown after charging £335.4m for exceptional items
(last year £139.7m).
This year’s financial reporting period covers 52 weeks.
An estimate of operating profit (before exceptional items) for
the 52-week comparative period last year is shown below.
2001 2000
52 weeks 52 weeks 53 weeks
Operating profit £m £m £m
UK Retail 334.8 386.8 420.1
Financial Services196.3 115.9 115.9
International Retail:
Europe (11.4) (9.4) (6.1)
North America 32.0 14.0 16.4
Far East 7.4 (4.3) (3.3)
Total International 28.0 0.3 7.0
Excess interest charged to cost
of sales of Financial Services 7.9 ––
Total operating profit 467.0 503.0 543.0
Interest 13.9 14.2 14.2
Profit before tax and exceptionals 480.9 517.2 557.2
Adjusted earnings per share 11.4p 12.2p 13.2p
1Financial Services operating profit is stated after £16.2m of merchant fee
income from UK Retail (last year £nil).
Review of performance by operating division – UK Retail
Sales and footage
UK Retail sales for the period were £6,293.0m (last year,
52-week comparative period, £6,351.1m).
A summary of the sales performance (including VAT) for the
year is given below. Like-for-like sales, which are estimated by
comparing total sales with new and developed stores excluded,
are also given:
Actual Like-for-like
sales % on sales % on
last year last year
52 weeks 52 weeks
Clothing, footwear
& gifts –5.5 –
Home +11.5 –
General –4.2 –6.3
Foods +3.7 +2.6
Total –1.0 –2.6
The average selling price of general merchandise was reduced
by approximately 2.5%, which, coupled with a decline in the
number of units sold of some 1.5%, contributed to the overall
fall in general sales.
Overall food inflation was in the region of 1%.
Financial review
www.marksandspencer.com 3