Marks and Spencer 2003 Annual Report Download - page 4

Further progress in
winning back customers
and in building a platform
for future growth Roger Holmes Chief Executive
2Marks and Spencer Gro up p.l.c.
Chief Executive’s review
In last year’s review we stated that our business had turned the corner, with the recovery of our Clothing business.
This year I am pleased to say that we have made further progress, as well as building a platform for further growth.
Group operating profit from continuing operations and before exceptional items was £761.8m, an increase of
21.1%. This was mainly due to the performance of our core UK retailing business, although profits from Financial
Services and International retailing were also ahead of last year. Overall sales were £8.1bn, up 6.0% on last year.
For UK Retail, the increase in pre-exceptional operating profit of £126.7m to £631.9m was due to sales of £7.1bn
(up 7.5% on last year) combined with a better buying margin, offset by a 4.9% increase in underlying operating costs.
Clothing sales (inc. VAT) increased by 10.0%, helped by a strong performance in the first three quarters. We
increased market share by 0.7% over the year, with Womenswear, Menswear and Lingerie all showing gains, with a
particularly strong performance across casualwear ranges. We also gained a 1.3% improvement in the Clothing
primary margin as a result of the relocation of our supply base and we have made progress on delivering the next
phase of supply chain efficiencies. This is targeted to improve the Clothing primary margin by 1% per year for the
next three years.
Our Food business outperformed the market and has now delivered strong growth for the second year in succession,
with our customers continuing to rate us highly on quality, innovation and trust.
We continued the renewal of our stores where we have now completed over 90% of the estate, rolled out more Café
Revive coffee shops and opened 13 new Simply Food stores, including one store operated by Compass Group.
In addition, the introduction of performance management, new store management structures and business
involvement groups all played a positive role in business performance this year. We have also made a number of
improvements in the way we work with our suppliers.
Next year will be about growing our core business, as well as developing our new paths to growth in Food,
Financial Services and Home. We will also focus on making our business more efficient, to allow us to invest in our
plans for the future.
In Clothing we will be working on three fronts: continuing to drive improvements in our core categories; pursuing
opportunities in categories where we still have relatively low share; and through delivering recovery in Childrenswear.
In Food, we will continue to differentiate our products through our quality and innovation and make them available
to more people by opening Simply Food stores on high streets and railway stations across the country. As at year end
we had opened 18 Simply Food stores and aim to open 150 by 2005/06.
In Financial Services, we are very pleased with the progress of our credit and loyalty card pilot, and have started
entering into the commitments necessary to enable a national roll-out in the second half of the year. In Home we
will be unveiling our first Home concept store ‘Marks & Spencer Lifestore’ in Gateshead in spring 2004.
In conclusion, we are pleased with a year in which we made further progress in winning back our customers and in
building a platform for future growth. But we know we have more to do and further opportunities to attract our
customers to shop with us. We also know we can create a more efficient business, which will underpin our
performance in a more testing market as we invest in the future development of the Group.
Roger Holmes
Chief Executive