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04
MARKS AND SPENCER GROUP PLC
STRATEGIC REPORT
OVERVIEW
This year we have seen outstanding
performance in some areas of the business
but performance below our expectations
in others. The overall result is that
underlying profi ts before tax moved ahead
6.1% to £661.2m. We have achieved a
number of the strategic priorities we set
out at the beginning of the year, becoming
a more capable company with signifi cantly
stronger infrastructure, but we experienced
some implementation issues along the way.
We embedded new values aligned with our
strategic goals. These values, which put
integrity at their core, respect our heritage
whilst helping us to become the modern,
agile company we need to be. Above all, we
remain focused on one thing: o ering our
customers products of exceptional quality
and value that they can trust, however they
choose to shop with us.
PERFORMANCE
Our Food business had an outstanding year
in a sector that continues to go through
profound change. In the most competitive
food market of recent years, we delivered
like-for-like growth in every quarter and
maintained our margin. We have a clear and
distinct o ering and our growth plans look
clear and achievable.
Our General Merchandise (GM) business
delivered signifi cant margin gains – the
fi rst step in reaping the benefi ts of the
investment we have made – and our
products were well received by our
customers and the fashion press. Whilst
our overall performance was a ected by
the implementation issues outlined below,
it was pleasing to exit the year in the fi nal
quarter with all elements of our GM
business showing growth.
Performance in our International
business was disappointing. Strong sales
performance in key owned markets, for
example India and Hong Kong, was more
than o set by macroeconomic issues and
performance in key franchise markets,
particularly Russia, Ukraine and Turkey.
We implemented two crucial pieces of
infrastructure: our new M&S.com website
and our automated distribution centre at
Castle Donington, two of the largest
projects of their kind in Europe. Whilst
projects of this scale are likely to
experience some initial performance issues,
these were greater than we anticipated. Our
skilled teams acted decisively to address
the issues. The strategic rationale for both
projects remains clear.
BOARD PRIORITIES
The Board’s three priorities have remained
the same since I became Chairman in 2011:
we are focused on strategy and execution,
people and succession, and values. Having
completed the bulk of our major three-year
investment programme to transform M&S
into an international, multi-channel retailer,
the Board’s focus again this year was on
ensuring that our substantial investment
delivers the required returns. We also
devoted time to ensuring we have the right
talent and skills required in our business,
and to debating and articulating our values,
discussed below.
BOARD CHANGES
There have been a number of changes to
the Board this year.
Jan du Plessis, our Senior Independent
Director, stepped down in March 2015,
having served on the Board since 2008.
I would like to thank Jan for his
commitment and contribution to M&S over
the years. His insights and experience have
been invaluable. Vindi Banga, who has
served on our Board since 2012, took on the
position of Senior Independent Director; he
also chairs the Remuneration Committee.
In April 2015, Richard Solomons joined the
Board as a non-executive director. Richard
is Chief Executive of InterContinental
Hotels Group and brings strong
commercial, consumer, branding and
global experience to the M&S Board.
On the executive team I would like to
extend a warm welcome to Helen Weir,
our new Chief Finance O cer. Helen has
exceptional credentials in both retail and
fi nance having previously held the same
position at John Lewis Partnership, Lloyds
Banking Group and Kingfi sher.
This year we reviewed our senior
remuneration framework to align it more
clearly with our strategic objectives.
Further details are laid out in our
Remuneration Report on page 52.
OUR VALUES AND PLAN A A
The culture at M&S is important to the
Board. Our values are a fundamental part of
how we do business – they are what makes
M&S di erent. Last June we introduced four
From our values to our infrastructure, M&S is a
more capable and better equipped business than it
was a year ago – helping us become the modern,
agile company we need to be.
ROBERT SWANNELL CHAIRMAN
OUR BUSINESS
CHAIRMAN’S
STATEMENT
6.4p
INTERIM
PAID ON 9 JANUARY 2015
11.6p
FINAL
TO B E PA ID O N 10 J U LY 2 015
18.0p
TOTAL DIVIDEND FOR 2014/2015