DELIVERING...

M&S is one of the UK's leading retailers, with over 1,330 stores worldwide. We are committed to delivering sustainable value for our shareholders and enhancing lives every day through the high quality, own brand food, clothing and home products we offer in our stores and online both in the UK and internationally.

Watch our highlights of 2015 here

Our Business

AT A GLANCE

UK

We sell high quality, great value products to 33 million customers through our 852 UK stores and our e-commerce platform. Our business has two divisions: Food, which accounts for 57% of our turnover, and General Merchandise, which accounts for the remaining 43%. We have market leading positions in Womenswear, Lingerie and Menswear.

Food Revenue
£5.2bn
+3.4%
General Merchandising Revenue
£4.0bn
-2.5%
Stores
852
+54 net
new
stores

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Our Business

AT A GLANCE

M&S.COM

Our M&S.com flagship positions us as a leading multi-channel retailer. Launched in February 2014, the website gives us flexibility to cater to customers' changing shopping habits, whether they are shopping online via their mobile, on a tablet, or at Shop Your Way points in our stores. The site now has over 7 million registered users.

M&S.com sales*
£636.5m
-2.0%
*M&S.com sales for the year ending 2014/15 are on a post store returns basis. M&S.com sales have been restated on a consistent basis for 2013/14.
Weekly site visits
6.1m
+10.9%
Shop your way stores
520
+22
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Our Business

AT A GLANCE

INTERNATIONAL

M&S has 480 wholly-owned, jointly-owned or franchised stores in 59 territories across Europe, Asia and the Middle East. Our International business now includes a fast-growing standalone Food operation, meaning that more people around the world can enjoy our delicious, innovative food products. Our significant physical presence overseas is complemented by country-specific General Merchandise websites.

International revenue
£1.1bn
-5.7%
International stores
480
+25 net
new
stores
Territories
59
+5
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Our Business

AT A GLANCE

PLAN A 2020

Plan A, our ethical and environmental programme, underpins everything we do, from sourcing responsibly and reducing waste to helping the communities in which we operate. It is a business plan that maps out our route to providing leadership in a world that's increasingly resource-constrained and experiencing social change. See Plan A Report 2015

TOTAL PLAN A 2020 COMMITMENTS
102
COMMITMENTS ACHIEVED
47
COMMITMENTS NOT ACHIEVED
9
COMMITMENTS ON PLAN
39
COMMITMENTS BEHIND PLAN
2
COMMITMENTS NOT STARTED
5
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OUR PERFORMANCE

FINANCIAL HIGHLIGHTS

Group Revenue
£10.3bn
level
Underlying Profit before Tax
£661.2m
+6.1%
Group Profit before Tax
£600.0m
+3.4%
Interim and Final Dividend
6.4p + 11.6p = 18.0p
+5.9%
Underlying group earnings per share
33.1p
+2.8%
Group earnings per share
29.7p
-8.6%

Strategic priorities for the year
At the start of this financial year, we set out four strategic priorities to enable us to deliver our plan to become a leading, international
multi-channel retailer: Food sales growth, GM gross margin improvement, improving GM performance and strong cash generation.
UK food revenue
£5.2bn

+3.4%
General merchandise gross margin
52.6%

+190bps
UK general merchandise revenue
£4.0bn

-2.5%
Free cash flow pre dividends
£524.2m

+22.5%
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Our Governance

CHAIRMAN'S OVERVIEW

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

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Our Plan

CHIEF EXECUTIVE'S
STRATEGIC OVERVIEW

We are transforming M&S into a stronger, more agile business - putting the right infrastructure, capabilities and talent in place to drive our strategic priorities.

In 2014/15 we made further progress against our strategy to become a leading international, multichannel retailer - as we enhanced our M&S.com infrastructure.


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Marc Bolland Chief Executive

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Our Plan

OUR PLAN IN ACTION:

FOOD SALES
GROWTH

In a crowded marketplace, our position as a food specialist sets us apart from our rivals. Customers love our innovation: it's a strategy that makes us truly different. Last autumn, our Belgian Chocolate Jaffa Sphere became our fastest-selling dessert ever: we sold 170,000 in just six weeks. Such was the demand that our supplier went into 24-hour production.

We have improved levels of availability and choice. 112 stores now carry our full range of 6,300 Food products, increasing convenience for our customers. By offering our full range in a larger number of stores we are helping people cater for their busy lives; over 40% of our customers buy food for today or tonight.

Our Simply Food format continues to grow strongly. We opened 62 new stores in the UK this year, taking our total to 504. Our franchise partners play a key role in this growth. In March we opened our 200th Simply Food store through our partnership with BP.

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Our Plan

OUR PLAN IN ACTION:

GM GROSS MARGIN
IMPROVEMENT

As part of our strategy to improve our margins, we are bringing much of our design in-house. 35% of our clothing is now created, designed and sourced by our own teams, up from 20% at the end of last year, and our target is 60% by 2016/17. Our Direct Design strategy has led to greater collaboration between our buying teams, our design teams and our regional Sourcing Offices.

A better buying process has helped increase our margins, for example through the way that we procure our fabric. We used to source our linen from 28 fabric mills. Now, we use eight. Consolidating the number of mills has allowed us to create efficiencies, save time and be smarter in how we buy.

Better availability is key to boosting our margins, but some of the behind-the-scenes systems and processes which regulate this are over 25 years old. Our GM4 Programme is changing this - we are overhauling everything from our merchandise planning systems to our allocation and replenishment systems. GM4 will make us more efficient and more profitable.

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Our Plan

OUR PLAN IN ACTION:

IMPROVE GM PERFORMANCE (WOMENSWEAR)

When we see a trend coming, we work quickly to interpret it for our customers. As the UK market leader in Womenswear denim, we knew that the recent denim catwalk trend would resonate with our shoppers. With strong editorial backing on M&S.com, a feature in Vogue, bold in-store visual merchandising and joined-up marketing, our range was a hit. We sold 4.3m pairs of women's jeans, up 7% on the year.

Customers love newness, so we've made sure that we send more to more stores, with new lines landing in store every 2-3 weeks. Our Limited Edition range is now in all stores and our Rosie for Autograph lingerie and sleepwear is in the majority of stores, giving more choice to more of our customers, no matter where they live.

Over 70% of our female customers deem the fit of a garment to be the number one determining factor of quality. Our Fit Development team, which is unique to M&S, undertook a major project to ensure a consistent, good fit across all our brands. It has resulted in a 20% reduction in customer complaints about fit. We want our customers to feel confident about finding stylish clothes that fit and flatter, whatever they buy.

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Our Plan

OUR PLAN IN ACTION:

STRONG CASH
GENERATION

Prudent cost management has led to strong cash generation across the business. We run our stores more efficiently than in the past. This year we launched a new Resource Planning System to increase the effectiveness of our colleagues' work patterns. We also saw the benefits of a new payroll system which centralised administration. Our free cash flow before dividends was £524.2m this year, compared to £427.9m last year.

We have become a more agile and flexible organisation, resulting in improved working capital. Tactical supply chain initiatives such as our move to 'push allocation' - whereby stock is replenished automatically based on customer demand - have resulted in better, more efficient stocking, saving us time and money.

Capital expenditure this year fell to £527m, from £710m, following a period of major investment to bring our infrastructure up to date. We are now in a good position to maintain our existing assets while also having the headroom to invest in new ones as we fulfil our ambition to be an international, multi-channel retailer.

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