Marks and Spencer 2016 Annual Report Download - page 23

Download and view the complete annual report

Please find page 23 of the 2016 Marks and Spencer annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 132

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132

GOVERNANCEFINANCIAL STATEMENTS OUR BUSINESSOUR PERFORMANCE
21
ANNUAL REPORT AND FINANCIAL STATEMENTS 2016
TOTAL ONLINE SALES1
£791.5m+23.4%
2014/15: £641.3m
Defi nition Total M&S.com revenue
including web to home and Shop Your
Way transactions.
Performance We grew sales as we
continued to refi ne and develop the
infrastructure we have put in place over
the past few years. Our sales growth was
ahead of the market and we are now the
second largest online clothing retailer.
WEEKLY SITE VISITS
7.8m+28.5%
Defi nition Weekly visits to our UK
desktop, tablet, mobile sites and app.
Performance 7.4 million customers
shopped online with us this year, our
highest number yet. Customer satisfaction
scores improved as we constantly refi ned
the customer experience, making the site
quicker and easier to navigate.
SPACE GROWTH
1.4%
Defi nition Year-on-year increase in
weighted average selling space.
Performance International space growth
was lower than previous years, as there
were fewer new store openings due to
the challenging macro-economic
environment. We also closed our
12 stores in the Balkans.
REVENUE
£1.1bn-2.0%
2014/15: £1.1bn
Defi nition Sales from the International
business including sales for owned
business and sales to franchisees.
Performance Our International business
had a challenging year, although key
markets including Ireland and Greece
returned to like-for-like growth and India
performed well, delivering a double digit
sales increase.
UNDERLYING OPERATING PROFIT
£55.8m-39.6%
Defi nition Underlying operating profi t
provides additional information on
performance adjusting for income
and signifi cant one-o charges.
Performance Profi t was impacted
by a combination of Euro
devaluation, challenging
macro-economic environments
and infrastructure challenges.
LOOKING AHEAD
M&S.COM (52 WEEKS) INTERNATIONAL (52 WEEKS)
Food We believe that our core strategy
on Food is clear and that our focus on
quality, innovation and choice is right
and will continue to deliver sustainable,
profi table growth. We expect the roll -
out of our standalone Food stores to
continue to drive sales growth, with
space forecast to grow by c. 5% in the
year ahead. Given ongoing competitive
pressure, we expect gross margin to
remain level, as we continue to re-invest
operational e ciencies into price, quality
and innovation.
Clothing & Home We are confi dent the
actions we’re taking to address sales
performance will deliver results, however
it will take time for our customers to
notice the improvements and change
their shopping behaviour. Given current
market conditions and our decision to
invest in price and reduce promotional
activity, we expect to see the same sales
trend as last year. We will continue to
realise margin gains from ongoing
sourcing initiatives. However, currency
remains a headwind and we expect this,
combined with our decision to invest
in price, to deliver an increase of
c. 50-100bps.
International We expect the factors
which impacted profi ts this year to persist
through 2016/17. We see further pressure
from the Euro exchange rate, as well
as weak trading conditions in Western
Europe. The macro-economic backdrop
in most of our franchise markets is not
improving, and we will continue to work
with our franchise partners to support
them through these challenging times.
We are still reviewing the shape of our
International business and will report
back in the autumn.
Financial management Tight control
of costs remains a priority and we will
continue to focus on driving e ciencies.
Operating costs are expected to increase
by c. 3.5%. We will invest in store sta ng
to give our customers great service.
In addition, we are facing higher costs
as a result of new space and increased
depreciation as well as volume growth
and infl ation. We are continuing with
our focus on cash generation. Capital
expenditure is expected to be lower
at c. £450m.
1. M&S.com sales for the year ended 2014/15 have been restated to incorporate statutory adjustments and a change in allocation of furniture sales between channels. M&S.com sales for
2015/16 have been prepared on a consistent basis.