Marks and Spencer PLC

Marks and Spencer plc
Company profile
6 June 2013
BUSINESS DESCRIPTION
Marks and Spencer plc (M&S or the Group), known colloquially as Marks and Sparks or M&S, is one of the UKs leading retailers,
with 20 million people visiting its stores each week. The Group, established in 1884, is headquartered in the City of Westminster
and has 766 stores across the UK (May 2013), in high streets, major shopping centres and retail parks, as well as railway stations,
airports, petrol and service stations and other locations ranging in size from over 100,000 sq ft, to Simply Food stores of around
7,000 sq ft. Overseas, M&S has 418 international stores in 51 territories across Europe, the Middle East and Asia (May 2013). M&S
also sells through other channels including: online, mobile site, in store ordering, telephone and home catalogue.
M&S sells clothing and home products, as well as food that is sourced from around 2,000 suppliers globally. The Group claims to
be the number one provider of womenswear and lingerie in the UK, and is rapidly growing its market share in menswear, kidswear
and home.
M&S is focused on becoming a multi-channel retailer (see Strategy). In FY13, multi-channel revenues, comprising sale across the
internet and mobile channels, reached 652m (generated across the UK and the International businesses).
Financial Services (M&S Bank)
M&S Bank launched in autumn 2012, built on the foundations of M&S Money, which provided a range of financial products for over
25 years. M&S Bank is the trading name of Marks & Spencer Financial Services plc, a wholly owned subsidiary of HSBC Bank plc,
and offers a range of financial services including:
Cards. Premium Current Accounts, Credit Card and Premium Club.
Loans. Personal Loan and Car Buying Plan.
Travel. Travel Money.
Insurance. Home Insurance, Car Insurance, Travel Insurance and Pet Insurance.
Save & Invest. Savings, Marks and Spencer Unit Trust Funds and HSBC World Selection Portfolios.
As well as Internet Banking and 24 hour Current Account support from a UK based Customer Services team, M&S Bank branches
are open whenever M&S stores are open including evenings and weekends.
Business Line
Retailing of food, clothing and homeware
UK Main Office
Waterside House, 35 North Wharf Road, London W2 1NW
Status/Exchange/Index
Advisers
Staff
Last Year End
London Stock Exchange/ FTSE 100

Market cap: 7.32bn (6 June 2013)
Auditor: PwC
Brokers: Morgan Stanley & Co International plc and Citi
Bank: HSBC Bank
Financial PR: RLM Finsbury
Property Adviser: Gerald Eve
Remuneration Consultant: New Bridge Street
Solicitors: SJ Berwin, Slaughter and May, Wragge & Co, Bond Dickinson, Field Fisher Waterhouse,
Osborne Clarke and Allen & Overy
Registrar: Equiniti Limited
81,734 (FY13) UK: 74,519, Overseas: 7,215
31 March 2013
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Prepared by: Brook Intelligence Centre in association with Property Week
Date of publication 6 June 2013 | Brook Intelligence Centre Limited 2013

OPERATING SEGMENTS
M&S engages in the retail of food (including fresh produce, groceries, partly-prepared meals and ready meals), homeware and
clothing products (womenswear, lingerie, menswear and kidswear). Its principal brands include Classic, per una, Indigo, Autograph
and Limited Collection, among others.
The Group reports the following operating segments:
UK
(89% of FY13 Group
revenue)
International
(11%)
Comprises M&S UK retail business and franchise operations. UK turnover has a broadly even split
between Food and General Merchandise (Clothing & Home).
In FY13, Food accounted for 54% UK revenue and General merchandise the remaining 46%. In the
UK, the Group has 766 stores.
Comprises M&S owned businesses in the Republic of Ireland, Europe and Asia, together with
international franchise operations.
SHOP FORMATS
Core shops typically feature a selection of the Groups clothing ranges and an M&S Food hall. The range of clothing sold and
the space given to it depends on the location and customer demographic. The M&S Food halls sell groceries, mostly under the
M&S brand.
Outlet Shops offer M&S products with the majority of them discounting at least 30% from the original selling price. Many of the
Outlet shops are in locations such as retail parks and outlet centres, though some were previously main M&S shops which
converted to the Outlet format.
M&S Simply Food stores sell mostly food and groceries but usually also carry a small selection of general merchandise, such
as birthday cards and homeware. A number of these are run under franchise agreements including:
o Select Service Partner (SSP) runs 34 Simply Food outlets at rail locations, six at airports, alongside five retail outlets and
four cafs in UK hospitals. (Source: SSP website, February 2013).
o In 2005, in a drive to improve the overall service station experience, BP signed an agreement with M&S and there are now
over 120 M&S Simply Food at BP Connect stores (source: BP website, February 2013).
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FINANCIALS
ANNUAL FINANCIAL PERFORMANCE MARKS AND SPENCER PLC
52 weeks ending - ms
30 March 2013
31 March 2012
2 April 2011
3 April 2010*
28 March 2009
10,026.8
9,934.3
9,740.3
9,536.6
9,062.1
Underlying operating profit
781.6
810.0
824.9
843.9
768.9
Underlying profit before tax
665.2
705.9
714.3
694.6
604.4
Profit before tax
564.3
658.0
780.6
702.7
706.2
Profit for the year
458.0
489.6
598.6
523.0
506.8
Revenue
* FY10 comprises the 53 weeks ending 3 April 2010.
FY13 GROUP OVERVIEW

Revenue
Underlying operating profit
Profit before tax
10bn +0.9%
782m
564m -14.2%
-3.5%
Revenue increased 0.9% (+1.3% on a constant currency basis) on FY12 to 10bn, driven by sales growth in both International
and the UK, with particularly strong growth in Food.
Underlying operating profit decreased 3.5% on FY12 to 782m.
o M&S says it navigated the short-term market challenges through strong financial management. In a highly promotional
marketplace, it says it protected its margins through a tight control of mark downs and well targeted promotional activity.
Underlying profit before tax decreased 5.8% on FY12 to 665m.
Profit before tax fell 14.2% on FY12 to 564m.
Funding
The Groups May 2012 bond matured in FY13 and was refinanced from existing facilities and operating cash.
At year end, the Group had a committed syndicated bank revolving credit facility of 1.325bn set to mature on 29 September
2017. M&S also has a number of undrawn uncommitted facilities available. At the year-end these amounted to 105m (FY12:
105m), all of which are due to be reviewed within a year. At the balance sheet date a sterling equivalent of 81m (FY12: nil)
was drawn under the committed facilities and nil (FY12: nil) was drawn under the uncommitted facilities.
In addition to the existing borrowings, the Group has a euro medium-term note programme of 3bn, of which 1.5bn (FY12:
1.6bn) was in issuance as at the balance sheet date.
The 5.875% 267m bond was repaid in May 2012. A new 4.75% 400m bond was issued under the programme in December
2012 maturing in June 2025.
Revenue by Segment
4%
7%
UK - General Merchandise
41%
UK - Food
Int'l - Franchised
48%
Int'l - Owned
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Divisional Performance
UK
Revenue increased 0.9% on FY12 to 8.9bn, with a like-for-like decrease of 1%. M&S
added 2.8% of space in the year, 2.6% in General Merchandise and 3.1% in Food, on a
weighted average basis.
o General Merchandise revenues fell 2.4% to 4.1bn.
o Food revenues increased 3.9%, with like-for-like sales up 1.7%, to 4.9bn.
Operating profit was 661m, down 2.2%.
International
Revenues increased 0.9% (4.5% on a constant currency basis) over FY12 to 1.1bn,
reflecting double digit growth in the Groups priority markets as well as more challenging
conditions in its legacy European markets.
o Franchised store revenues were 393m, up 3.5%, with the franchise business in the
Middle East region delivering strong growth.
o Owned store revenues were 683m, down 0.6%. Owned businesses in India and
China delivered a strong performance, driven by good like-for-like growth and the
opening of new space.
Operating profit was 120m, down 10% (down 10.9% on a constant currency basis), due
to the impact of currency translation, prevailing macroeconomic conditions and start-up
costs in key markets.
o Franchised store operating profit fell 3.9% to 106.3m, with the Groups European
franchise partners trading environments impacting on their business.
o Owned store operating profit also fell but by a more significant 39% to 13.9m, due to
continued macroeconomic pressures in Europe combined with initial start-up costs in
priority markets.
Rev: 0.9%
Rev: 0.9%
OUTLOOK
Group Outlook
As of May 2013 M&S expects the market to remain challenging for the foreseeable future. The Group also expects consumer
spending to remain cautious and carefully planned. However, the Group remains fully committed to the delivery of its plan (see
Strategy); ensuring that as M&S evolves, it remains in touch with customers so that it can anticipate and respond to their changing
needs. The transformation of M&S into a leading multi-channel retailer will be supported by the creation of stronger, more agile
infrastructure building a robust platform for our long-term growth.
The Groups guidance for FY14, reaffirmed in May 2013, is as follows:
Gross margin is expected to grow by 30bps to 50bps with a similar range in both General Merchandise and Food.
Operating costs are expected to increase by c. 3.5% as a result of inflation and volume growth, the addition of new space and
increase in depreciation.
Group capital expenditure is expected to be c. 775m, a reduction on the previous guidance of 850m. From FY15, M&S
expects it to fall to c. 550m per annum, a reduction on the previous guidance of 600m per annum.
M&S is targeting underlying profit improvement, but expects to incur c. 30m non-recurring dual running costs, as a result of the
transition to the new web platform and the opening of the new distribution centre in Castle Donington.
The planned opening of new space will add c. 2% to UK and c. 15% to International space.
Analysts Outlook
According to analysts estimates, Group revenues will be 10.4bn in FY14, up 3.5% on FY13. In FY15, revenues will reach
10.8bn, an increase of 3.7% on FY14.
The consensus forecast, provided to M&S by a number of registered investment analysts and updated on 4 June 2013, is for Group
profit before tax to be 675m in FY14, 765m in FY15 and 845m in FY16.
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STRATEGY
In November 2010, M&S set out its three year plan to transform the Group from a traditional, British retailer into a truly international,
multi-channel retailer. The first part of the plan, from 2010 to 2013, focuses on the UK, while the second part is aimed towards
developing the Groups position on an international level.
In November 2010 M&S set out a target to grow its revenues by 1.5bn to 2.5bn over the next three years. As a result of the
deterioration in the economic environment since the plan was set out, M&S now expects to achieve a 1.1bn to 1.7bn increase
in revenues.
FOCUS ON THE UK
The first part of M&S plan, from 2010 to 2013, focused on the Groups UK business, which involves: developing and enhancing the
Groups brand, developing its core Clothing, Home and Food offer, and making its stores easier to shop in.
Brand
The brand position Only at Your M&S continues to underpin all of M&S campaigns. Additionally, in FY12, M&S launched its first
ever sub-brand advertising to support the transformation of the likes of its Autograph and Limited Collection from labels into
distinctive, standalone brands (see below).
In an increasingly competitive marketplace, the M&S brand is meant to highlight the value and quality offered across the Group
M&S campaigns are now serving a dual purpose: reassuring loyal customers and encouraging potential new shoppers to take
a fresh look at M&S.
o The Only at Your M&S comprises mostly innovation-led ads.
In a context when customers are budgeting carefully, M&S is responding with promotions that address these priorities, such as
the upbeat kidswear Happy Half Term offer and Our Gift to You 25%-off deals in December 2012, which delivered a record
week of sales for menswear.
Clothing
In FY13, M&S underperforming womenswear division dragged the Group to a second consecutive decline in annual profits (see
SWOT) as UK sales fell 1% overall, with a particularly poor performance in general merchandise mainly fashion and homewares
where sales dropped 4.1% on a like-for-like basis.
CEO Marc Bolland has installed a new management team to revamp the Groups womenswear ranges. A new head of general
merchandise, John Dixon, was appointed, and former Debenhams CEO Belinda Earl joined as part time style director.
In May 2013 Earl unveiled her first collection for M&S. The clothing ranges unveiled have been billed as a make-or-break
moment for the CEO Marc Bolland (see SWOT).
Additionally, as of May 2013 new store formats have been rolled out across 337 stores (65% of total sites) with the remaining
due for an upgrade by the end of 2013.
Food
M&S maintains its focus on freshness, speciality and convenience. Additionally, greater choice is being offered across all the
Groups ranges.
In reinforcing its position as a specialist food retailer, during FY12 M&S embarked on a programme of changes to its Food Halls
the Group re-launched its in-store bakeries and introduced new deli counters to some of its stores.
In FY12, seeking to maintain its reputation in innovation and choice in food offers, M&S introduced some 1,900 new lines,
including 100 international brands exclusive to M&S, as well as the Dessert Menu range and a 59 party food options for
Christmas. Additionally, the Group continues to work closely with its suppliers to deliver more innovation in quality produce.
In May 2012, with value front of mind, the Group introduced Simply M&S, a range of over 700 products that highlights M&S
quality at affordable prices. M&S plans to extend the range further in 2013.
Stores
In FY12 M&S began work on delivering a more inspiring shopping experience to its customers, through the roll out of a new store
format. Over two-thirds of the Groups UK stores had been transformed by the end of FY13. At the same time, the Group continues
to extend its UK store portfolio.
As of May 2013 M&S had 766 stores across the UK in high streets and retail parks as well as stations, airports and other
locations ranging from large out-of-town and flagship stores of over 100,000 sq ft, to Simply Food stores of around 7,000 sq ft.
The Groups largest store is located at Marble Arch on London's Oxford Street and has around 170,000 sq ft of selling space.
The breakdown by format as of May 2013 is as follows:
o Premier: 12 stores
o Simply Food (owned): 176 stores
o Outlet: 48 stores
o High street: 228 stores
o Major: 59 stores
o Simply Food (franchised): 243 stores
As of May 2013 M&S had plans to grow UK space at around 2% in FY14. The Groups aim is for 95% of the population to be
within a 30 minute drive of a full line store by 2015.
In FY13 M&S increased its UK store portfolio through the addition of over 410,400 sq ft of space through new stores,
developments and extensions, equivalent to annual space growth of 2.8%, and bringing total space to 16.4 million sq ft.
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o M&S expects the planned opening of new space will add c.2% to the UK in FY14.
The Group opened a number of larger stores in retail parks including Crystal Peaks, Peterborough, Milton Keynes, Ashton Moss
and Newport. M&S also continued its modernisation programme, undertaking major updates in 19 stores including Camberley
and its flagship Marble Arch store.
o In August 2012, M&S opened Cheshire Oaks, its new 151,000 sq ft flagship store for the North West, second in size only to
the Groups Marble Arch store in London and serving a catchment area of over 1.3 million people.
o In FY12 the Group opened 25 M&S Simply Food stores. A number of these are run under franchise agreements including
Select Service Partner (SSP) which runs 34 Simply Food outlets at rail locations, six at airports, alongside five retail outlets
and four cafs in UK hospitals.
o M&S has a pipeline of new stores and is committed to enhancing its position in major cities. The highlight in FY12 was the
opening of the Groups 136,000 sq ft sustainable learning store at Westfield Stratford City.
A new store format was rolled out to 66 stores by March 2012, following a successful pilot scheme. Phase 1 of the new format is
now being rolled out across the UK stores and to a selection of International stores for completion date of mid 2013. Phase 2
will be rolled out by the end of 2013.
o The new format delivers increased brand differentiation and improved navigation. This includes defined brand areas that
reflect the unique handwriting of each clothing sub-brand, while the refreshed Food Halls support M&S position as a
speciality food retailer, with revamped artisan bakeries and fresh deli counters.
o The Group has also completed work to better segment its stores according to local demographics - stock is now
appropriately tailored to local demographics.
o During 1H13 M&S launched the second phase of its new store concept including new Home and Beauty departments, as
well as improvements to M&S Woman and per una. In August 2012, the Group opened a new store at Cheshire Oaks which
showcased the complete new look for the first time.
Reduced Capex
In light of increased growth in e-commerce (see below), M&S has reviewed its space requirements and has taken the decision to
reduce its capital investments in UK space: in FY13, due to the store upgrades and the improvement in the supply chains (see
below), M&S capital spending hit 821m. This is due to fall to 775m in FY14 and 550m from FY15 onwards. In turn, M&S will
continue to develop the Groups space especially through the Simply Food format.
The planned opening of new space will add c. 2% to UK and c. 15% to International space.
MULTI-CHANNEL
Above all, M&S wants more of its customers to shop with the Group across more of its channels. The Group is looking to build a
platform for future international, multi-channel growth.
Online. In FY13, multi-channel revenues, comprising sales across the internet and mobile channels, reached 652m
(generated across the UK and the International businesses), a 16.6% increase on FY12. The Groups target is to increase sales
by 300m to 500m by FY14. Weekly site visitors grew by 18% over FY12 to 3.6 million.
o Recent improvements to make online shopping more attractive include: extending next day delivery options, adding
improved search functions, giving customers more choice and adding more online-exclusive products.
o In July 2012 M&S first transactional iPhone app went live with over 340,000 downloads to reach the top position in iTunes
Free UK Lifestyle Apps.
o In May 2012 M&S re-launched its mobile-optimised site, with improved browsing and search functionality.
o In February 2012 the Group launched M&S Outlet online, offering up to 40% off clothing prices.
o CEO Marc Bolland has described the online business as M&S's new "flagship store." However, he said there are no plans to
introduce an online home delivery service for food, despite it being one of the few areas of success for the business.
International. In October 2011 and April 2012 respectively, M&S took its first steps to become an international multi-channel
retailer, with the launch of its first international websites for the French and Irish markets, and the continued growth of
international deliveries from M&S UK site.
o M&S planned to add eight new international websites by the end of FY13 and is making progress with design and build of
the Groups new platform, which will provide M&S with capabilities to fulfil its multi-channel ambitions. Laura Wade-Gery
joined M&S as Executive Director, Multi-channel E-commerce, and recruited a team of industry leaders to drive the delivery
of all aspects of the plan.
o In October 2012 M&S entered four new European markets with the launch of localised customer websites in Germany,
Spain, Austria and Belgium. The move marked significant progress against plans outlined in May 2012 to trade online in ten
international markets in FY13.
INTERNATIONAL
With a new structure embedded (see below), a key priority for M&S is to grow its International business to reduce its dependency
on the UK economic cycle. To this end, the Group will continue to expand its presence in priority markets and work with existing
partners to enter new markets with a clearly defined business plan - a bricks and clicks approach. The Group will also roll out its
new store format across its international portfolio. In the years up to 2015, M&S key priority will be to drive its international
presence.
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As of May 2013 M&S traded in 51 territories from 418 stores totalling 5.4 million sq ft and it has further extended the reach of
the M&S brand through the launch of new in-country websites (see above). In FY13, space increased by c.16% (31 net new
stores), predominantly in the Groups key strategic territories of India, China, the Middle East and Russia.
New structure. In FY12, M&S put in place a new structure for its International business, dividing it into three regions: Europe,
Asia and the Middle East. A director was appointed to lead each region, supported by a head of business development to drive
new market growth. M&S also created an international visual merchandising team to ensure M&S customers have a more
consistent brand experience wherever they are.
o M&S is increasingly operating as a more international business, having integrated international marketing and buying into
the core teams.
Priority markets. M&S is focused on the clear growth opportunities in the Groups existing territories: China, India, Russia and
the Middle East.
o China. Concentrated in the Shanghai region, M&S Chinese stores continue to perform strongly and the Group had seven
stores as of June 2012, having opened three in FY12.
o India. Working with partner Reliance Retail, M&S has accelerated growth in India and had 24 stores in total as of November
2012. Six new stores were added in FY12 including M&S first high street stores at Connaught Place and South Extension in
Delhi.
Expansion. In FY12 M&S opened a total of 37 new international stores and in June 2012 announced plans to accelerate
growth over the next 18 months, opening around 100 stores and multiple country websites per year. As a result, M&S expects
to increase its investment in the International business by 50m over the three years of the plan.
o In 1H13 M&S opened 19 new international stores and more than 30 were to follow in 2H13. The openings in 1H13 brought
the Groups international operations to over 400 stores in 44 territories. In Asia, M&S opened nine new stores, focusing on
driving growth in its key priority territories of India and China.
Franchises. The Groups franchise operations are central to M&S international plans. Franchise partners account for 35% of
International sales. In FY12, M&S opened 24 new stores with its 18 global franchise partners.
o With partner Fiba, M&S opened eight new Russian stores in FY12, expanding in key locations such as Moscow and new
cities including Kazan.
o With Al-Futtaim, M&S grew its Middle East presence opening five stores in FY12 including a second store in Cairo, Egypt
and three in the UAE.
The Netherlands. In April 2013, M&S announced that it will return to the Netherlands with a combined e-commerce and stores
clicks & bricks' strategy. The move replicates M&S's successful return to France in 2011 (see below) M&S' strategy for the
Netherlands comprises:
o A brand new Dutch website serving customers across the country and a complementary mobile optimised.
o A multi-channel M&S store located on the Kalverstraat in the heart of Amsterdam's shopping district.
o A new agreement with BP to open six M&S Simply Food pilots at BP forecourts at key locations in Randstad, with the first
store opening in Utrecht in September 2013.
The new agreement is part of M&S's plans to open franchise M&S Simply Food stores in Western Europe and builds
on the successful UK partnership between M&S and BP which launched in 2005. There are now over 160 M&S Simply
Food stores at BP UK forecourts which M&S and BP will continue to strengthen and grow over the next few years.
o The opening of two full-line M&S stores at De Markies in The Hague and a flagship store at The Rokin in Amsterdam.
De Markies. The completely modernised development will include a 4,800 sq m M&S store opening in spring 2014.
The Rokin. Due to open in autumn 2015, the 6,100 sq m flagship store will be one of M&S's largest international
stores.
Benelux. Following the launch of its dedicated Belgian website in October 2012 M&S also plans to open a flagship store at
Toison D'Or, Brussels, in 2015. Additionally, in April 2013 M&S launched a dedicated website for customers in Luxemburg.
France. In November 2011, M&S returned to the French market, with a clear bricks and clicks strategy. The Group has defined
this approach as central to its international expansion, both in existing and new markets; enabling M&S to combine stores, the
web and digital technologies to quickly extend the reach of the brand.
o M&S returned to France with a brand new store in the heart of Paris, supported by an e-commerce offer. Trading over three
floors, the Groups new Paris store occupies a flagship location on the iconic Champs lyses.
o In October 2012 M&S opened its first new full-line Paris store at So Ouest in Levallois-Perret. Trading over three floors, the
new 6,900 square metre full-line store is part of M&S's bricks & clicks' strategy for France across stores and e-commerce.
o M&S is continuing to grow its presence in Paris and has already confirmed two further full-line Paris store locations at
Beaugrenelle and Aeroville due to open in spring 2013 and at the end of 2013 respectively.
SUPPLY CHAIN TRANSFORMATION

M&S is in the middle of a 1bn programme, which began in 2009 and will run through to 2015/16, to improve ageing IT and
distribution systems. The changes will also reduce the amount of stock the Group needs to hold by a third and help it to cut costs by
using just three distribution centres rather than more than 50 warehouses at present. The Group expects that the programme will
deliver annual benefits of 300m. The programme is made up of three key elements:
New supply chain. M&S is building a new fast, agile, flexible and reliable supply chain network that will create a more efficient
M&S and improve availability and customer service. It is a process that began in 2009 and will continue until 2016. It involves:
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o Moving from a network of 110 small warehouses for clothing, home and gift products to a small number of large, modern
distribution centres. The new network will significantly reduce the time it takes to move products from port to stores.
o Reducing reliance on full service vendors (suppliers that manufacture, store and distribute products for M&S) and migrating
suppliers to a direct sourcing model, bypassing the need for suppliers to handle distribution and storage.
o In May 2013 M&S opened its new 900,000 sq ft distribution centre (DC) in Castle Donington. The new site will handle all
orders (except food to order; flowers, beers, wines and spirits; and furniture) placed through www.marksandspencer.com
and will be a national distribution centre for M&S stores. The DC is capable of processing one million products a day and
has capacity to store 150,000 different products and 16 million individual products in totalNew business management systems. M&S is transforming its IT and business management systems from out-dated,
complex systems to new, modern and simple systems that help deliveries, improving availability and customer service.
o The Group has overhauled its food IT systems, helping buyers better forecast demand and buy more accurately for stores
with different needs. The changes have helped improve food availability by 3% since 2010.
o New systems in clothing, home and gifts will reduce markdown costs and lead to better stock availability.
o New HR systems have been installed in stores and offices to automate HR processes and deliver accurate HR information.
New multi-channel platform and e-commerce distribution centre. As part of its strategy to become a leading multi-channel
retailer, M&S is building a new, bespoke multi-channel platform that will drive www.marksandspencer.com (to launch in 2014)
and power all M&S multi-channel technology. Supported by the new e-commerce distribution centre at Castle Donington (see
above), the new website and multi-channel offer will improve availability.
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SWOT
STRENGTHS
WEAKNESSES
OPPORTUNITIES
THREATS
Market leader. M&S claims to be the number one provider of clothing & footwear and lingerie in the UK,
with 11.2% and 26.8% market share (by value) respectively. It is also growing its market share in
menswear and kidswear, due in part to its growing online business, with a 11.4% and 6.4% share
respectively (Source: Kantar Worldpanel, April 2013).
Strong foothold. M&S products are sold through 766 UK stores and more than 400 internationally,
across 51 territories. Over 93% of the UK population is within in a 30-minute drive of a full line M&S store
and the Groups franchise partnerships ensure M&S Simply Food offer is available in the most
convenient locations from railway stations to motorway services.
Ratings downgrade. In May 2013, Fitch Ratings downgraded M&S Long-term Issuer Default Rating
(IDR) and senior unsecured rating to 'BBB-' from 'BBB'. The downgrade reflects M&S's weakened
business risk profile as highlighted in its FY13 results, with a drop in underlying operating profit. It is also
reflective of a difficult consumer environment and the structural changes affecting large UK clothing
retailers, including: competition from value clothing retailers such as Primark and the supermarkets, the
growth of multi-channel retailing, the intensity of promotional activities and the fact that consumers are
less loyal to brands/retailers, switching between retailers for better promotions or deals.
Clothing drags down profits. In 1H13 M&S profit before tax fell 10% to 290m the Groups second
consecutive drop after it missed key fashion trends in womenswear early in 2012. Continuing the trend,
in FY13, M&S reported its lowest annual profit in four years, in line with analyst estimates, as the Groups
struggling general merchandise division dragged on the growth in food sales. As of March 2013, M&S
clothing business had posted seven consecutive quarters of underlying sales declines.
o M&S announced in May 2013 that growth in FY14 will be held back by investment in its online
business and logistics.
Online tax scheme. In May 2013, M&S faced criticism from tax campaigners over the way it structures
its online sales to Europe. The Group has been expanding its online operations to several countries
across Europe (see Strategy), but its structure involves shipping goods from the UK while invoicing the
transaction to Ireland, which has the lowest corporation tax rates in Europe. The Group's UK branch is
paid a wholesale price for the goods it ships by M&S Ireland, and this is subject to UK corporation tax, but
the rest of the retail markup is subject to Ireland's much lower rate of 12.5%. The disclosure came amid
mounting cross-party political focus on corporate tax avoidance, and tax campaigners have been
angered by the revelations, accusing M&S of trading off its British reputation.
Womenswear. M&S' share of the womenswear market its biggest source of revenue fell from 10.4%
to 9.9% in FY13. Underlying sales of M&S' clothing and homewares have been falling for nearly two
years. The brand has been in decline for much longer than that as shoppers have turned to a whole
range of cheaper, more fashionable or more luxurious alternatives.
Online retail. More consumers are choosing to shop across a combination of channels, a trend that is
being supported by the dramatic growth of smartphone and tablet ownership in the UK. Conlumino
analyst Neil Saunders predicted in mid-2012 that online sales would grow 13% that year, against a retail
market that was expected to shrink by c. 1%. M&S multi-channel strategy is already proving successful
and, in FY13, multi-channel sales were up 16.6%. Traffic to the Groups site continued to grow to an
average of over 3.6 million weekly visitors.
Clothing strategy well received. In May 2013 M&S revealed its new womenswear collections to City
analysts and investors have given an initial positive reception to the much anticipated new clothing
strategy and ranges. Eithne O'Leary at Oriel Securities said: Both sales and profits are likely to benefit
from an increasingly well-defined and confident range of stylish and high quality clothing which
showcased. The Guardian's Jess Cartner-Morley said the collection "could be a high street game
changer."
International. M&S is advancing with its strategy to become an international business. In FY12, it
opened 37 new stores and has plans to open around 100 stores and multiple country websites over the
18 months to 2014. The Groups priority markets in India and China have delivered a good performance
in 1H13, in sharp contrast to Europe where trading conditions remain difficult.
CEO under pressure. In January 2013 David Cumming of Standard Life Investments, M&S 10th largest
shareholder, said CEO Marc Bolland had six to nine months to sort out M&S underperforming clothing
business if he wanted to keep his job. Keith Bowman from Hargreaves Lansdown, said Bolland had "yet
to deliver" since being appointed in 2010. In June 2013, after M&S reported its lowest profit in four years,
Bolland was denied a performance payout and his pay was slashed by more than a third.
US competition. According to Morgan Stanley, retailers such as M&S could soon be facing a new wave
of competition from US clothing retailers. At least ten big US retailers are either already in the UK or
could arrive in the next couple of years. With supply chain globalisation and online shopping making it
possible to have a UK presence with only a few dozen stores, the threat is greater than ever before.
P a g e | 10

Analysts estimate it is possible US retailers could capture 5% to 10% of the UK market over five years.
UK downturn. FY13 was a year of continued economic turbulence, and during the year there was little
economic growth in the UK, with a GDP increase of just 0.3% in 2012. Vacancy rates remained high and
over the course of the year a number of well known retailers disappeared from the high street. Rising
energy costs and petrol price increases further squeezed household budgets, which resulted in a
decreased market footfall of 1.6%. In January 2013 M&S stated that it expects the pressure on
consumers disposable incomes to continue in 2013.
Eurozone. In 1H13, Trading in M&S European businesses was once again impacted by macroeconomic
pressures, particularly in the Republic of Ireland and Greece, and M&S took the decision to close four
stores across Greece and Eastern Europe.
o In 2010 M&S set out a target to grow its revenues by 1.5bn to 2.5bn over the next three years. As a
result of the deterioration in the economic environment since then, it now expects to achieve a 1.1bn
to 1.7bn increase in revenues.
New format competitors. Many large retail chains are widening their product offerings to cater to a
broader customer segment. Alongside this, product diversification has transformed many specialty
retailers into general retailers. In addition, M&S has to compete against a new crop of online only retailers
such as ASOS and the likes of Next which has an enhanced online offering and around 700 stores in the
UK, Ireland, Europe and the Middle East.
P a g e | 11
OTHER KEY EVENTS

PEOPLE
In May 2013 M&S appointed Jo Jenkins as Director of Lingerie and Beauty. In this role, Jenkins will form part of the General
Merchandise leadership team, reporting directly to John Dixon, Executive Director of General Merchandise.
BID RUMOURS
In March 2013 the media reported that M&S could be subject to a bid from one of the Middle East's largest investment funds, the
Qatar Investment Authority. The fund was said to be assembling a group of private equity investors to make an 8bn bid for the
Group. CVC was said to be among the groups the Qataris had approached about backing a bid.
o Analysts stated that M&S could be attractive to the Qataris thanks to its 8bn property portfolio: the Group owns 65% of its
stores and, if the value is realised, a sale and leaseback programme could see any investor make a quick return. However,
many of the sites have been described as unattractive to landlords and the M&S pension fund holds 1.5bn of freeholds as
part of a plan to reduce the pension deficit by 1bn in 2009.
o Rumours of the takeover bid pushed the Groups shares to a 28-month high but, sources played down the speculation.
However, neither M&S nor the Qatar Investment Authority issued a statement denying the rumours.
o At the time, analysts said M&S was vulnerable to a bid after a string of disappointing sales updates (see SWOT).
P a g e | 12
KEY PEOPLE
Robert Swannell - Chairman
Robert was appointed a non-executive
director in October 2010 and Chairman in
January 2011. He is also Chairman of the
Nomination and Governance Committee.
Robert has spent over 30 years in
investment banking with Schroders/
Citigroup. He was formerly Vice-Chairman
of Citi Europe and Co-Chairman of Citis European
Investment Bank. Robert has wide Board experience: he was
Chairman of HMV Group plc until March 2011 and a nonexecutive director until June 2011. He was Senior
Independent Director of both The British Land Company plc
and of 3i Group plc until 2010. Roberts regulatory and
government department experience includes the Regulatory
Decisions Committee of the FSA, the Takeover Panel Appeal
Board and the Industrial Advisory Board of BIS (Department
for Business, Innovation and Skills). He was also a director
and trustee of the educational charity Career Academies UK
from 2003-2010. He is a qualified Chartered Accountant and
Barrister.
EXECUTIVE COMMITTEE
Marc Bolland - Chief Executive
Marc was appointed CEO in 2010. He
began his career at Heineken NV in The
Netherlands in 1987, occupying several
Marketing & Sales management roles. In
1995 he was appointed MD for Heineken
in Slovakia, becoming Managing Director
for Heineken Export Worldwide in 1999. Marc was then
appointed to the Board of Heineken NV in 2001 with
responsibility for Western Europe, US, Latin America,
Northern Africa and Global Marketing. In 2005 he became
Chief Operating Officer. He joined Morrisons in 2006 as
CEO. Marc is currently non-executive Director of Manpower
Inc US, and has previously held non-executive Director roles
at Hotel de IEurope, The Netherlands (2003-2006), Quilmes,
Argentina (2001-2003).
Alan Stewart - Chief Finance Officer
Alan was appointed CFO in 2010. He has
extensive experience of retail and other
highly competitive industries, including
travel and banking. Alan spent nine years
working for HSBC Investment Bank before
joining Thomas Cook in 1996, where he
spent seven years, in roles including CEO of Thomas Cook
UK and Group Chief Financial Officer of Thomas Cook
Holdings. Alan joined WH Smith plc in 2005 as Group
Finance Director. In 2008 Alan joined AWAS, a leading
aircraft leasing company, as Chief Financial Officer until
2010. He was previously a non-executive director of Games
Workshop Group plc.
John Dixon - Executive Director, General Merchandise

John began his M&S career in UK store
management before moving to Paris for
three years where he held a variety of
commercial roles in European stores and
the Paris Head Office. He joined the UK
Head Office as a Food Buyer before
progressing to Category Manager for Fresh Produce. In
2002, he was appointed to Executive, heading up the fresh
food trading division. In 2004 John was appointed Executive
Assistant to the CEO. In 2007, he became Director of M&S
Direct. In 2008, he became Director for Home in addition to
M&S Direct and was also appointed to the Executive
Committee. John was appointed Director of Food in 2008
and Executive Director of General Merchandise in October
2012.
Steve Rowe - Executive Director, Food
Steve joined M&S in 1989 where he
progressed in a variety of roles within
store management. He joined Head Office
in 1992 as a Merchandiser for Menswear,
working across all areas of the Group. In
1998 he became Category Manager in the
Furniture Department, leading the team developing the
Home Growth Strategy. Steve was appointed Head of Home
categories in 2003 going on to become Director of Home in
2004. Between 2004 and 2008, he also assumed
responsibility for Beauty and New Business Development.
He was appointed Director of Retail and a member of the
Executive Committee in 2008 becoming Director of Retail
and E-commerce in 2009, reverting to Director of Retail in
2011, before being appointed as Executive Director, Food in
October 2012. Steve is Director on the Strategic Board of
The New West End Company.
Laura Wade-Gery - Executive Director, Multi-Channel ECommerce
Laura joined the Board in July 2011. She
was previously at Tesco plc where she
held a variety of senior roles from 1997.
Laura brings considerable retail and
consumer experience, including significant
e-commerce knowledge as CEO of Tesco.com and Tesco
Direct. Prior to joining Tesco, Laura held various roles at
Gemini Consulting and Kleinwort Benson. She has been a
non-executive director of Trinity Mirror since 2006.
Andy Adcock - Trading Director, Food
Andy joined M&S in 2009 as a
Commercial Director in Food, more
recently becoming Trading Director, Food.
He was appointed to the Management
Committee in 2012. Prior to M&S Andy
held a number of senior positions within
Trading, Marketing and Merchandising at Asda Walmart,
where he went on to become Brand Director. Andy started
his career at J Sainsburys where he worked in a number of
buying departments. He has over 20 years' experience in the
P a g e | 13

retail sector and has held a number of roles across all areas
of Food, Beverage and Beauty.
Sacha Berendji - Director of Retail
Sacha was appointed as Director of Retail
in November 2012. Sacha joined M&S in
1994 through the Graduate training
programme. He undertook various Retail
appointments across the country including
General Manager of Marble Arch Store
and Regional Manager for London. In 2007 Sacha joined the
Property Group as Head of Property Planning & Store
Development where he was responsible for both new space
development and the store modernisation programme,
before being appointed Executive Assistant to the Chief
Executive in 2009. Following this Sacha joined the General
Merchandise division as Director of Merchandising before
taking up his current position.
Patrick Bousquet-Chavanne - Corporate Director of
Strategy Implementation & Business Development
Patrick has more than 25 years
experience in the international branded
consumer goods industry, in London,
Paris and New York. He joined Este
Lauder in 1989 as VP and General
Manager, Aramis International, before
running Este Lauders worldwide Travel Retailing business.
Between 1998 and 2008 Patrick was a member of Este
Lauders Executive Committee, where he served as
President of International. Most recently Patrick was Group
President of the Este Lauder companies, where he oversaw
some of its largest brands. He stepped down from Este
Lauder in 2008 to pursue new opportunities in the new
technologies field. Patrick sits on the Board of BrownForman Inc, a global spirits company and HSN Inc.
Clem Constantine - Director of Property
Clem trained as a Chartered Accountant
at Stoy Hayward, joining Debenhams in
1989, as a Financial Analyst. He was
appointed to his first finance directorship
in 1993, for the IS brand of the Burton
Group plc, and moved through several
other finance directorships with variable responsibilities
including systems and retail until he was made Group
Property and Retail Planning Director, for the Arcadia Group
plc in February 1999. In this role he was able to apply his
considerable financial and retail expertise to maximise
profitability from the group's property portfolio while
executing a focused acquisition plan. He remained in this
role, with additional responsibility for Store Development until
recently. He joined the M&S team in 2006.
Steve Finlan - Director of International Operations
Steve was appointed to his current role in
January 2013. He has over 28 years'
experience of working within the retail
sector. Steve started his career at M&S in
1990
managing
International
and
Franchise operations before moving into
the role of Head of Training and Development. He moved to
Gap in 1999 where he was VP of HR Europe, before moving
to Thomas Cook where he was Managing Director of Sales.

He returned to M&S in 2006 as Director of Retail. Steve is
also a Non-Executive Director for the Bedfordshire NHS
Trust.
Jan Heere - Director of International
Appointed in May 2011, Jan is Director of
International at M&S. He has extensive
international experience and began his
career at Manpower in Spain in 1997.
Between 2000 and 2002 he held a variety
of senior management roles at fashion
retailer Zara, real estate company Groupo Inmobiliario
Lupaco and e-learning group Charanga. In 2002 Jan joined
Inditex where he held a number of international roles. Most
recently Jan was General Manager for Inditex Russia, where
in the last five years he grew its presence from some 20
stores to more than 170 stores employing around 4,500
people. Jan is fluent in English, Spanish, French, Dutch and
Russian.
Tanith Dodge - Director of Human Resources
Dominic Fry - Director of Communications & Investor
Relations
Steven Sharp - Executive Director, Marketing
Dirk Lembregts - Director of Supply Chain
Nayna McIntosh - Director of Store Environment &
Product Presentation
Darrell Stein - Director of IT
Amanda Mellor - Group Secretary and Head of Corporate
Governance
Non-Executive Directors
Vindi Banga - Member of the Nomination and
Remuneration Committees.
Miranda Curtis - Member of the Nomination and
Remuneration Committees.
Jeremy Darroch - Member of the Nomination Committee.
Andy Halford - Member of the Nomination and Audit
Committees.
Steven Holliday - Member of the Audit and Nomination
Committees.
Martha Lane Fox - Member of the Audit and Nomination
Committees.
Jan du Plessis - Senior Independent Director. Member of
the Audit, Remuneration and Nomination Committees.
OTHER KEY STAFF

Robert Ivens - Head of Legal
Robert is Head of Legal, responsible for
the day-to-day provision of legal advice to
the Group worldwide. He heads a legal
team of 18 lawyers, plus support based at
M&S head office at Paddington, London,
which provides advice principally on
employment,
commercial
contracts,
marketing and advertising, real estate, intellectual property,
consumer protection and regulatory, and compliance law
(Source: Consero Group LLC, 2013). While a lot of work is
retained in-house at M&S, external legal spend is never less
than 4m a year (Source: Legal Business, 2013).
P a g e | 14

Qualifying as a solicitor in 1983, Robert worked in private
practice with major London firms before joining M&S in 1985
as a solicitor. He was appointed Head of Legal in 1989.
Robert is a member of the faculty for Conseros 2013
European General Counsel Forum.
M&S made headlines in 2004 when Robert helped the Group
fight off a 9.1bn acquisition bid by businessman Philip
Green, who owns a number of large high street retail brands.
P a g e | 15
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