Marks and Spencer 2008 Annual Report Download - page 8

6MARKS AND SPENCER GROUP PLC
April 2007
‘Wash at 30’
campaign
M&S announces
campaign to wash at
30˚C, and to re-label
almost 75% of its
clothing ranges to
include the words
‘Think Climate –
Wash at 30˚C’.
June 2007
Recycled
schoolwear
launches
M&S becomes the
first retailer to launch
schoolwear made from
recycled plastic bottles.
September 2007
Saturated fat
levels cut
M&S cuts as much as
82% of saturated fat
levels from over 500
products including
sandwiches, ready
meals, crisps and
savoury snacks.
September 2007
Big & Tall launches
Offering more than 450
items online, ranging from
tailoring to knitwear to
casual shirts and trousers,
at the same price as
standard sized clothes.
November 2007
A Hollywood
Christmas
The Christmas advertising
campaign launches featuring
leading man Antonio Banderas
alongside the M&S leading
ladies.
In food, a good performance saw sales increase from £3.97bn to
almost £4.25bn, and value market share remain steady at 4.3%.
M&S Money continues to benefit from our partnership with
HSBC, with 3.8 million customers now signed-up to an M&S
Money financial product. M&S Money now has more than
3.1 million M&S Money credit cards in circulation, 114 bureaux
de change in our stores, and it served 4.8 million travel money
customers during the year. Its range of financial products also
includes car, home, travel, pet and wedding insurance, as well
as cash ISA and unit trusts like the M&S Ethical Fund.
As we take the business forward, we are broadening the plan for
long-term growth. This will be achieved by continuing to invest in
our core UK retail business introducing new goods and services;
strengthening our UK property portfolio; driving our M&S Direct
business; expanding our international business; and ensuring
Plan A – our ‘eco plan’ – is integrated in everything we do.
I will return to the specific steps we’re taking to achieve
our objectives on page 7. First I want to review the changes
we’ve made to ensure we are building on a strong foundation.
Building management capability
On page 4, Lord Burns explains the business rationale for
my appointment to Executive Chairman. As the decision has
attracted much comment, I’d like to highlight the immediate
and longer-term benefits for the business.
We believe in developing management talent internally,
but this has been difficult for M&S in recent years, with the
business experiencing considerable turbulence, followed by
rapid change since the turn of the millennium. However, we now
have a strong senior team in place, which has an opportunity
to develop its skills – with Ian Dyson as Group Finance and
Operations Director, Steven Esom and Kate Bostock appointed
as Executive Directors running food and clothing respectively
and Steven Sharp continuing in his role as Executive Director
of Marketing. We also benefit from an expanded and talented
Executive Committee (pictured on page 8).
With Ian taking on significant new responsibilities, I can now
focus on a more specific set of executive responsibilities,
in particular product, people development, and key growth
areas for the business including M&S Direct and International.
My new role will also give me time to develop and mature talent
within the business – a key task for any Chairman. At the same
time the Board will be able to continue to drive a proven plan
without distraction, in a difficult economic environment.
Responding to market conditions
2007/08 was a year of two halves, with a strong start followed
by a weaker performance. While we believe our second half
performance is largely attributable to a deterioration in market
conditions, like any retailer there are things we could have done
better. For instance, although we sold significantly more volume,
we under-potentialised products in the middle and top price
categories – what we call ‘better’ and ‘best’ – during the key
Christmas period.
Although we can’t predict how severe the current downturn
will be, or how long it will last, we expect its impact to be felt
into 2009/10. However, we believe we have the potential to
outperform the competition by planning for modest sales
growth and keeping a tight control on costs and stock levels,
while at the same time, driving our business using our five
key values of: quality, value, service, innovation and trust.
Our efforts in the last three years to re-engage with customers
so they once again consider M&S as ‘great value’ for money,
will support us in the years ahead.
We have reviewed our pricing architecture in order to attract
a broad range of customers. We are now achieving a wider
price span – staying in touch with the supermarkets at entry
levels, while extending our offers above and beyond other
high street retailers. It will enable us to flex our ‘good’, ‘better’
and ‘best’ ranges to respond to changing customer demand,
as and when the economic situation alters.
We continue to invest in our stores, having completed 70%
of our store modernisation programme. We plan to modernise
an additional 10% of space, and open an additional 5.5% of
new space in 2008/09 so that we enter a difficult period for
UK retailing, with the majority of our stores looking their best
and using every square foot to its full potential.