Marks and Spencer 2015 Annual Report Download - page 29

GOVERNANCEFINANCIAL STATEMENTS
27
ANNUAL REPORT AND FINANCIAL STATEMENTS 2015
OUR PERFORMANCE OUR BUSINESS
GENERAL MERCHANDISE
PERFORMANCE OVERVIEW
Two of M&S’s key priorities for 2014/15 were
to increase our GM gross margin and to
improve GM performance. Weachieved the
former, with a 190bps increase – one of the
largest margin improvements ever seen in
one year at M&S. The rise was largely due
to better buying and sourcing, resulting in
an overall increase in profitability for our
GM business. We also focused on further
improving our clothing ranges, which
were well received by customers and the
fashion press, most notably Womenswear.
This was underlined by our fourth quarter
performance – we ended the year in growth
on a total and like-for-like sales basis, giving
us positive mo mentum totake into the new
financial year.
MARGIN AND SALES
Despite a highly promotional marketplace,
we remained focused on full price sales and
we reduced the number of price promotions
this year. This approach also contributed to
our substantial gross margin improvement.
However, w hilst we rem ain the UK’s clothing
leader, our focus on margin growth and full
price sales has impacted our discounted
market share, contributing to a sl ight
reduction in our overall market share.
We also changed the way we buy our
merchandise. We now design 35% of our
products in-house compared to 20% last
year, and we are making good progress
against our long-term target of 60% by
2016/17. We continue to use our scale to
source fabric and raw materials more
e ectively whilst ensuring we uphold our
quality credentials – perceptions of quality
were up 6%.
Sales for the year as a whole were
disappointing. The UK retail sector was
impacted by the third warmest autumn
on record and we were disproportionately
a ected due to our high market shares in
winter categories such as knitwear and
coats. We al so f aced disruption to d el iveries
due to the unsatisfactory performance of
our online distribution centre over the peak
Christmas period. At the start of the year, we
said that our GM sales would be negatively
impacted by the set tl ing in period of our
new website. Since then, good progress has
been made – M&S.com sales were back in
growth in the fourth quarter.
OUR PRODUCTS
Overwhelmingly positive press coverage
gave customers confidence to turn to us
for our interpretation of the key trends.
Customers’ feedback was equally
encouraging; they were excited to see
more confident, bolder collections.
We continue to improve the style of our
ranges – customer perceptions of style were
up 4%. We listened to customer feedback
and brought greater consistency to the
fi t of our garments across all product
categories and brands. Overall, customer
compl aints fell by 34% over the year as
customers noticed the improvements to
our Womenswear.
INSPIRING OUR CUSTOMERS
We have made a number of improvements
to our stores to make them easier and more
inspiring places to shop. We presented outfit
ideas to customers in smarter ways through
better use of mannequins and pictures in
our stores. We introduced a new Menswear
layout with simplified displays and strong
images emphasising our style and quality.
We extended our Womenswear Limited
Edition brand to all stores and our popular
Rosie for Autograph lingerie and sleepwear
ranges to more stores, giving our customers
more choice no matter where they shop.
WORKING EFFICIENTLY AND
WITH INTEGRITY A
Much has been going on behind the scenes
to improve our supply chain. We have
successfully rolled out the first new system
to improve the replenishment of our
products and availability. Along with the
ongoing improvements we are making to
how we design, source and buy, further
planning system changes will be made in
the coming year.
R Responsible supply chain management
is a key par t of ensuring we o er customers
the high-quality products they expect
from us. We believe that great quality starts
with good factory and supply chain ethics,
and we continue to work closely with
our suppliers to ensure these rigorous
standards continue to be upheld.
We have improved the quality and style
of our ranges and delivered strong gross
margin growth.
JOHN DIXON EXECUTIVE DIRECTOR, GENERAL MERCHANDISE
1. In response to customer demand, we opened a
registration list for our Autograph Suede Skirt
heroed by the fashion press as a key item for this
summer’s 1970s trend – thousands of customers
joined the list.
2. We launched David Gandy for Autograph, a
luxurious range of sleepwear and underwear –
wesold over 450,000 items.
3. A We were pl eased to b e in clude d o n
Ethisphere’s World’s Most Ethical Companies list.
£4.0bn
UK GM
REVENUE
9.0%
WOMENSWEAR
MARKET SHARE1
26.3%
LINGERIE
MARKET SHARE1
10.8%
MENSWEAR
MARKET SHARE1
5.9%
KIDSWEAR
MARKET SHARE1
2. 3. 1.
OPERATING PERFORMANCE
-2.5% –0.4% pts –0.8% pts –0.4% pts-0.2% pts
Note 1 We co nt inu ously wo rk w ith K ant ar to en su re an accur ate re prese nt ati on o f o ur bus ine ss as wel l a s our sale s p er fo rman ce . T his has resulted in the
recalibration of historical market share data to provide a more accurate representation. This data is not comparable to any publ ish ed b efo re No ve mber 2014.