Marks and Spencer 2004 Annual Report Download - page 3

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During this time we have changed our
business fundamentally by:
•continuing to improve our
management team;
•developing our supply chain,
which will deliver further efficiency
and reduce costs; this is only
possible because of the painful but
necessary shift to overseas
sourcing. In 1998, we sourced just
20% of our clothing overseas and
today that figure is 90%;
•exiting loss-making operations in
Europe and the UK;
•ensuring that the balance sheet is
more efficient, with the return of
£2 billion to shareholders in 2002;
•delivering impactful but low-cost
improvements to our stores
throughout the chain; and
•making our special foods more
accessible to more customers
through the roll-out of the Simply
Food format.
More specifically, in the past year
we’ve seen progress in creating new
sources of growth. In our Food
business, we’ve further extended our
reach with the opening of more
Simply Food and Food only stores.
In Financial Services, now re-branded
Marks & Spencer Money, we’ve
introduced the ‘&more’ credit and
loyalty card. And we’ve opened the
first stand-alone Marks & Spencer
Lifestore as a major step towards
becoming one of the UK leaders
in home retail.
All these changes have contributed
to a strong recovery in the operating
profit of our core UK retailing
business. This has enabled us to
deliver a 24.7 pence earnings per
share this year, more than double
the level of 2001. Combined with the
restructuring of our balance sheet
and capital return in 2002, we have
delivered a current return on equity,
adjusted for exceptional items, that
is ahead of that achieved in 1998, the
year of peak Group profitability.
Group operating profit increased by
12% to £866 million and Group profit
before tax by 6% to £805 million, all
on a 53-week basis. Group operating
cash flow is £1,066.5 million before a
pension contribution of £400 million.
A final dividend of 7.1 pence per
share shows an increase of 9.2%
making the total dividend for the year
11.5 pence compared to 10.5 pence
last year.
Although we planned for better sales
figures overall, we have made
progress in Menswear, Lingerie and
women’s casualwear. These sales
figures should not obscure the hard
work throughout the business to
ensure better choice and value,
more appealing stores and greater
efficiencies, all of which will translate
into shareholder value over the
longer term.
You can read how we’re doing in
corporate social responsibility (CSR)
in our second CSR publication, now
available on our website. You can see
details of our Marks & Start
programme that we think sets a new
standard of effective, measurable
social involvement.
Regarding my own role, the
unexpected death last year of my very
close friend Paul Louis Halley has
meant that I must honour, earlier than
anticipated, a personal commitment
to the Halley family. This will require
me to play a significant role in
representing their interests and, as
a result, I have reluctantly informed
the Board of my wish to leave the
Company’s Board of Directors. I will
remain in post for as long as necessary
to establish my successor.
I have said previously that we can
never claim to have ‘made it’ and that
we must always be looking for ways to
improve our business. Looking back
on my time at Marks & Spencer, I feel
immense pride that we have
accomplished a considerable amount.
I do, however, recognise that there is
still much more to do. I have greatly
enjoyed this role and would like to
extend my appreciation and thanks for
the support shown to me by
colleagues, shareholders and
suppliers.
Luc Vandevelde
Chairman
Chairman’s message LUC VANDEVELDE
We have delivered financial performance which I would describe
as ‘solid’ but clearly we are not satisfied with our saIes progress.
The market share gains that we had hoped to achieve were not
delivered and Roger, in his summary opposite, will update you on
the actions we are taking to improve our performance. However, it
would be easy to lose sight of the fact that we are building this next
stage on secure foundations, which we have put in place over the
last three years.