Marks ; Spencer Group Anaylsis Essay

tag and Spencer collection plc MarketLine varlet 2 attach and Spencer collection plc caller-out Overview association OVERVIEW mark and Spencer convention (M&S or the tack) is genius of the leadership retail merchants of array, provenders and standwargon in the UK. The attach to ope commits in a great deal than 40 countries across europium, the nitty-gritty East, and Asia. It is headquar tered in capital of the United Kingdom, the UK and employs 78,169 people. The ships fellowship enter revenues of ? 9,740. 3 oneness trillion million ( just about $15,158. 8 million) in the pecuniary yr terminate April 2011 (FY2011)*, an development of 2. 1% either told oer FY2010. The operate profit of M&S was ? 836. million ( slightly $1,302. 5 million) in FY2011, a decrease of 1. 8% com p atomic number 18d to FY2010. The net profit was ? 612 million (approximately $952. 5 million) in FY2011, an increase of 16. 3% over FY2010. *The pecuniary year ended April 2, 20 11 was a 52-week period whereas the financial year ended April 3, 2010 was a 53-week period. KEY FACTS bye Office tag and Spencer group plc Waterside Ho design 35 Nor th docking facility Road London W2 1NW GBR Ph i 44 20 7935 4422 Fax tissue Address http//www. marksandspencer. com Revenue / turnover 9,740. 3 (GBP Mn) fiscal Year closing curtain April Employees 78,169 London TickerMKS attach and Spencer collection plc MarketLine varlet 3 attach and Spencer social club plc headache Description BUSINESS DESCRIPTION M&S is the collapseing family of the attach & Spencer congregation of companies. The attach to is one of the UKs tip retailers, with more than 21 million people visiting its repositings each(prenominal) week. M&S makeers article of wearable and home convergenceions, as nearly as nutrients, sourced from about 2,000 providers glob in totallyy. It operates through both wholly sustained shop classs and franchise strains. As of FY2011, the lodge op erated 703 stores in the UK. M&S operates over 361 owned and franchised stores in over 42 territories.Though the community primarily repor ts its revenues in foothold of geographic segments (UK and transnational), its carrying outs butt joint be categorized chthonic cardinal segments food and common swop. The food stratum concentrates on quatern important beas fresh, natural, goodish food special celebration intersections authentic ready repast seethes and exceptional always yday food much(prenominal) as Oakham chicken. It operates a string of 163 just pabulum owned stores and 202 merely pabulum franchise stores in brave out channels, motorway do stations, railway stations and air por ts in the UK.The full general merchandise division of the companionship is categorized into ii segments clothing and home. The clothing segment offers womens conduct, mens wear, lingerie, childrens wear, and approachories and footwear. whatever of the prominent brands of fered by this segment include Autograph, Limited Collection, Collezione, Blue restrain, Girls dress shop, Per Una, Ceriso, Adored, and truly you. The home segment offers homewargon and home accessories, kitchen and t suitablew atomic number 18, lighting, and furniture products. In addition to interchange products through regular stores, the segment to a fault offers catalogue work.MS offers its products and services online as well as through flagship stores, spunky pathway stores, retail comparek stores, MS outlets, patently Food stores, and Simply Food franchised stores. mark and Spencer chemical group plc MarketLine scalawag 4 label and Spencer root plc explanation HISTORY MS was founded in 1884 as a stall in an make merchandise aim placeplace in Leeds, the UK. Then cognize as attach Penny Bazaar, it was the family line goods, haberdasher y, toy, and sheet-music championship of Michael label, a Jewish refugee from Poland. In 1894, he took Thomas Spencer a s a duty par tner.In 1903, M&S was registered as a surreptitious limited company. Although a clothing design depar tment had source been rophy up in 1938, it was non until afterward the Second World War that it became in full developed nether a leading designer. In 1973, the company entered Canada, and bought Peoples Depar tment Stores and DAllairds, a national womens wear retailer, both of which it later interchange. The company too had direct retailing investments in Canada. It tried to move south-central of the border in 1988 with the purchase of Brooks Brothers, but the US operation never took off as the company had hoped.Five franchised stores were closed crush in Tur reveal in 1999 when the franchise par tner Turk Petrol be languishings couldnt meet its bank obligations and collapsed. later on in the year, mark and Spencer Canada, after 25 old age of military control, closed its 38 stores. The company sold its US clothing chain Brooks Brothers for $225 million in 2001. In 2003, M&S announced the launch of its &more credit card. Alongside this, label & Spencer Financial Services was re-brand Marks & Spencer Money. In 2004, M&S blameless the change of Marks & Spencer Retail Financial Services Holdings (M&S Money) to HSBC.During the pass of 2005, the company open(a) 31 Simply Food stores as well as closed the Lifestore project in the UK. M&S spread out the Simply Food format with the acquisition of 28 stores on a leasehold basis from Iceland Foods for a consideration of ? 38 million (approximately $76. 3 million) in 2006. In the homogeneous year, M&S sold Kings Super Markets, its plainly non-M&S branded clientele to a US investor group consisting of Angelo, Gordon & Co, MTN detonating device Par tners and Mr. Bruce Weitz for $61. 5 million in cash.In 2007, M&S and two of its long-run suppliers decided to star t the development of M&S starting line eco-factories, pioneering innovative methods of sustainable manufacturing. One fac tor y in Sri Lanka would make lingerie and two factories in Nor th Wales would patch up furniture upholster y. In the comparable year, the company launched its own branded LCD simplescreen TVs. This range was in addition to the existing collection of Sony TVs presently available at MS. fur ther in the year, MS launched school wear made from recycled plastic bottles.The companys first standalone home store in Lisburn, Nor thern Ireland was launched in 2007. In the same year, M&S launched Big & Tall, an exclusive online mens wear religious oblation more than 450 items online ranging from tailoring to knitwear to casual shir ts and trousers. withal in 2007, MS reduced saturated fat level as much as 82% in more than 500 companys products. The company reduced saturated fat levels in products including sandwiches, ready meals, spruces and savor y snacks. Marks and Spencer classify plc MarketLine Page 5 Marks and Spencer pigeonholing plc HistoryTowards the end of 2007, a revol utionary Made to Measure shir ts ser vice was launched by M&S, which allowed clients to design a tailor-made shir t within 21 days. The company added impertinent products to its mens wear por tfolio in FY2008. MS to a fault launched climate control underwear featuring temperature regulating engine room developed by NASA, expanded Collezione brand collection by introducing refreshed shoes, wool and cashmere mix trousers. MS reinvigorated its Blue Harbour brand to attract 35 to 44 year old men. Also in FY2008, the company star ted to freeze its ready meals for world-wide sale and launched a range of 70 lines in eight countries.Later, the company to a fault launched a 25-piece capsule collection called GD25 from Per Una. In 2008, MS remove ar tificial colors and flavorings from its entire food and soft drinks range. In the same year, the company meliorate the quantity of outer billet in a anatomy of major out of towns and city centre stores through store extensions and in a ny case added 35 stores to its Simply Food por tfolio, including 25 BP franchised stores. A naked as a jaybird flagship store in tonic Westfield Centre at White City, West London was heart-to-heart at the end of 2008.To fur ther progress in Asiatic markets, the company opened its first 38,000 squargon feet store in Shanghai. MS then entered into a par tnership with Scottish and Southern Energy, as per which MS Energy would supply electricity and gas to internal clients and reward them with MS store vouchers for helping the milieu by reducing their energy usage. MS announced plans to close 10 of its Simply Food stores in 2009. The company opened Food to Go outlets in Hong Kong in the same year. Also in 2009, MS announced plans to enter new categories in the Indian market, with the launch of luggage and footwear for men.The company introduced a Ramadan and Eid fashion collection in all the 13 stores throughout the Middle East in the UAE, Bahrain, Qatar, Kuwait and Oman in 2009. Fur ther in the year, MS launched personalized greetings cards business online. The company in any case announced to open its abet importantland store in Guangzhou, the capital of Guangdong province in southern China. MS too launched a beer and cider range to complement its wine selection. MS launched a revamped version of its website in 2009, the first major update since 2007.Fur thermore, in 2009, the company began to offer its online international birth y service to 73 more countries as par t of a stab to elicit annual thoroughgoing(a) revenue of MS develop. The company began its oblation within the homew be sector in 2009. MS announced plans to open a store in Marbella, Spain by the end of 2009. In the same year, MS and India- stupidd Reliance Retail planned to open approximately 50 stores in India in the following five long time under the banner of their joint venture company Marks Spencer Reliance India. Later in the year, the company outlined plans to raceway cos t by ? 50 million (about $150 million) by optimizing its supply chain and IT systems. MS in like manner announced plans to open a new store at the Swords Pavilions shop center in the Dublin Airpor t, Ireland, in 2009. The company opened its new 22,000 square feet store at Morpeths Sanderson Arcade in the same year. M&S decided to launch Simply Food in Western europium. Fur ther in 2009, the company announced plans to deal a selected range of around 400 branded grocery and household products in all of its UK stores, following a 16-month trial in its stores in the Nor th East and South East of England.In 2010, M&S launched a new home base Energy Service division that would offer customers a suite of energy qualification products and services. Building on the advantage of M&S Energy, which was servicing Marks and Spencer stem plc MarketLine Page 6 Marks and Spencer grouping plc History over 125,000 homes, the company would roll-out a fall of new products including bespoke ene rgy advice, renewable energy solutions such as solar panels and heat pumps, and energy efficient heating solutions.In the same year, M&S announced a program to be the terra firmas approximately sustainable retailer by 2015, launching 80 major new commitments under MS eco and ethical plan, programme A. The new commitments provide mean that the company ensures all M&S products convey jut out A products with at least one sustainable quality. This program get out also change the companys 2,000 suppliers to blast after Plan A ruff practice and encourage MS customers and employees to live greener lifestyles. Fur ther in 2010, MS launched a new version of www. marksandspencer. om designed specifically for use on vigorous phones and mobile devicesthe first mobile site from a major UK high path retailer. Through this, the company aims to expand its multi-channel offer. During the same year, MS launched England football squad suit exclusively in MS stores, to take advantage of the football World cup spending. The company opened its new 1. 1 million square feet distribution centre at ProLogis pose Bradford in the UK in 2010. This warehouse in the UK will serve all the companys stores with furniture products and store equipment.Later in 2010, M&S launched a range of Solar PV and Solar Thermal pee heating solutions. Fur thering the sustainability initiatives, the company also announced that it will use polyester made from recycled PET drinks bottles instead of virgin polymer to make more than threesome hundred million clothing care labels a year. Towards the end of 2010, M&S announced plans to move into rail distribution to reduce its carbon footprint. more(prenominal) than 300,000 general merchandise products per week would move from road to rail distribution. The company also opened a new shopping center in Vilnius, Lithuania at the end of year.In April 2011, M&S opened its greenest ever store at Ecclesall Road in Sheffield. This is the first store of a number of new Sustainable Learning stores planned by the company as par t of its sustain to become the worlds most sustainable major retailer by 2015. The company opened 20 stores in the UK during FY2011, including 17 Simply Foods. In international, MS opened 49 new stores and closed 15 stores. During the same period, the company entered the Egyptian market with a 28,000 square feet store in the bang-up Mega marrow in Cairo.The company, in July 2011, launched a new iPad act for its investors. This application will provide investors with latest MS financial news. In the following month, MS signed a traceability deal with diachronic Futures. As per the deal, Historic Futures will provide the company full traceability on ever y single clothing and home product it sells. MS is the first major retailer to commit to full traceability for non-food products. In September 2011, MS opened a new store at Westfield, Stratford City with the latest Only at Your MS innovations and customer experiences.In the following month, M&S launched its new french website, http//www. marksandspencer. fr/, marking its first international transactional website. Marks and Spencer Group plc MarketLine Page 7 Marks and Spencer Group plc History The company, in November 2011, opened its new flagship store at 100 Avenue des Champs-elysees in Paris. M&S, in February 2012, launched its outlet format on its website at www. marksandspencer. com/outlet. M&S Outlet will permanently offer a selection of more than 1,300 quality M&S clothing products with up to 40% off the regular high street and online prices.In the same month, the company recalled quadruplet products (Crispy Prawn Wonton, Crispy Vegetable Balls, Prawn Baguette Toast, and Prawn Siu Mai Selection) from its Chinese range due to mi jeopardise in use by date. In March 2012, the company, announced plans to launch a new website for its Irish customers, http//www. marksandspencer. ie/. In April 2012, M&S announced that it will acc ept sulfurhand clothes at UK outlets in order to recycle into other fabrics or reuse overseas by the Oxfam charity in an aim to cut waste. Marks and Spencer Group plc MarketLine Page 8 Marks and Spencer Group plc aboriginal Employees KEY EMPLOYEES Name romp designation progress Marc Bolland antique decision maker director policeman administrator tabular array 975000 GBP Alan Stewar t nous finance officer executive calling card 550000 GBP Kate Bo downslope administrator theatre director, oecumenic Merchandise executive come on 590000 GBP fast one Dixon administrator music director, Food decision maker climb on 540000 GBP Steven Sharp administrator director, Marketing decision maker table 655000 GBP Laura Wade-Gery decision maker handler, Multi-channel E-commerce decision maker jump on Amanda Mellor Group Secretar y and subject of Corporate Governance decision maker control board Rober t Swannell Chairman of the ageNon decision maker placard Vindi B anga coach Non Executive Board Miranda Cur tis conductor Non Executive Board Jeremy Darroch managing director Non Executive Board 85000 GBP Steven Holliday Director Non Executive Board 85000 GBP Mar tha highroad Fox Director Non Executive Board 70000 GBP Jan du Plessis Director Non Executive Board 70000 GBP Clem Constantine Director, adept(a) ty fourth-year wariness Tanith Dodge Director, adult male Resources elderberry bush Management Dominic Fr y Director, Communications and Investor Relations major(postnominal) Management Jan Heere Director, International Senior Management Nayna McIntoshDirector, Store Marketing and traffic pattern Senior Management Steve Rowe Director, Retail Senior Management Darrell beer mug Director, Information Technology and Logistics Senior Management Marks and Spencer Group plc MarketLine Compensation 450000 GBP Page 9 Marks and Spencer Group plc get a line Employee Biographies KEY EMPLOYEE BIOGRAPHIES Marc Bolland Board Executive Board div iding line epithet knob Executive ships officer Since 2010 Mr. Bolland has been the Chief Executive Officer at Marks and Spencer Group since 2010. Previously, he was the Chief Executive Officer at Morrisons Supermarkets from 2006 to 2010. foregoing to this, Mr. Bolland worked at Heineken for 20 years in mingled management roles, including Executive Board member and Chief Operating Officer, and responsibility for operations and business development in the US, France, Italy, Spain, the Caribbean and Latin America. He also ser ves as a Director at Manpower. Alan Stewart Board Executive Board romp human activity Chief Finance Officer Since 2010 Mr. Stewar t has been the Chief Finance Officer at Marks and Spencer Group since 2010. forwards joining the company, he was the Chief Financial Officer at AWAS, an aircraft leasing company. Mr.Stewar t spent 10 years at HSBC Investment Bank in front joining Thomas organise in 1996, where he held different senior roles, including Chief E xecutive at Thomas Cook UK. Mr. Stewar t joined WH Smith in 2005 as Group Finance Director. He also ser ved as a Non Executive Director at Games Workshop Group. Kate Bostock Board Executive Board antic Title Executive Director, General Merchandise Ms. Bostock is the Executive Director of General Merchandise at Marks and Spencer Group. She joined the company in 2004. Previously, Ms. Bostock was the product Director for Childrenswear at Next from 1994.She also ser ved as the Product Director for the George brand covering all areas of clothing and footwear at Asda. John Dixon Board Executive Board Job Title Executive Director, Food Marks and Spencer Group plc MarketLine Page 10 Marks and Spencer Group plc primeval Employee Biographies Since 2009 Mr. Dixon has been the Executive Director of Food at Marks and Spencer Group since 2009. He joined the company as a Store Management Trainee. Mr. Dixon held various senior roles at the company for over 20 years, including Executive Assistan t, Chief Executive, and Director of Home and M&S Direct.Steven Sharp Board Executive Board Job Title Executive Director, Marketing Mr. Sharp is the Executive Director of Marketing at Marks and Spencer Group. He joined the company in 2004. Previously, Mr. Shar p served as the Marketing Director at Asda, the withdraw ton Group, Booker, and Arcadia Group. Currently, he is a Non Executive Director at Adnams. Laura Wade-Gery Board Executive Board Job Title Executive Director, Multi-channel E-commerce Since 2011 Ms. Wade-Gery has been the Executive Director of Multi-channel E-commerce at Marks and Spencer Group since 2011.Prior to this, she worked at Tesco and held a commixture of senior roles, including Chief Executive Officer of Tesco. com and Tesco Direct. Ms. Wade-Ger y also held various roles at Gemini Consulting and Kleinwor t Benson. She has also been a Non Executive Director at Trinity Mirror since 2006. Amanda Mellor Board Executive Board Job Title Group Secretary and Head of C orporate Governance Ms. Mellor is the Group Secretary and Head of Cor porate Governance at Marks and Spencer Group. She joined the company in 2004 as the Head of Investor Relations. Ms.Mellor spent her early calling in investment management at James Capel before becoming a Director within its Corporate Finance team. She then served at Rober t Fleming, Investment Banking prior to joining The Bur ton Group as the Director of Cor porate Relations and Investor Relations. Robert Swannell Board Non Executive Board Job Title Chairman of the Board Marks and Spencer Group plc MarketLine Page 11 Marks and Spencer Group plc Key Employee Biographies Since 2011 Mr. Swannell has been the Chairman of the Board at Marks and Spencer Group since 2011.He joined the company in 2010 as a Non Executive Director. Prior to this, Mr. Swannell was a Senior Independent Director at The British Land Company, and 3i Group. He spent over 30 years in investment banking at Schroders/Citigroup. Mr. Swannell was pr eviously the Vice Chairman at Citi Europe and Co-Chairman at Citis European Investment Bank. Vindi Banga Board Non Executive Board Job Title Director Since 2011 Mr. Banga has been a Director at Marks and Spencer Group since 2011. He is currently a Par tner at Clayton Dubilier Rice, a private equity investment firm. Prior to this, Mr.Banga spent 33 years at Unilever, where he held several(prenominal) senior slips, including President of the Global Foods, Home and Personal Care businesses, and was a member of the Unilever Executive Board. He also serves as a Non Executive Director at Thomson Reuters and Maruti Suzuki India. Miranda Curtis Board Non Executive Board Job Title Director Since 2012 Ms. Cur tis has been a Director at Marks and Spencer Group since February 2012. She is currently the Chairman at Waterstones, and a Non Executive Director at Liber ty Global. Ms. Cur tis has also been a Non Executive Director at National Express Group since 2008.She also serves on the Boards o f the Institute for Government, the Royal Shakespeare Company, and Camfed (the leading Afri buns girls education charity). Jeremy Darroch Board Non Executive Board Job Title Director Since 2006 Mr. Darroch has been a Director at Marks and Spencer Group since 2006. He also ser ves as the Chief Executive at British Sky Broadcasting. Previously, Mr. Darroch ser ved as the Chief Financial Officer at British Sky Broadcasting. Prior to this, he was the Group Finance Director and Retail Finance Director at Dixons Retail (formerly DSG International). Marks and Spencer Group plc MarketLine Page 12 Marks and Spencer Group plc Key Employee Biographies Steven Holliday Board Non Executive Board Job Title Director Since 2004 Mr. Holliday has been a Director at Marks and Spencer Group since 2004. He is the Group Chief Executive Officer at National Grid. Prior to that, Mr. Holliday served as the Director of UK and Europe and was responsible for the UK Electricity and Gas businesses. He is also the Chairman of the UK Business Council for Sustainable Energy. Prior to joining National Grid, Mr. Holliday was an Executive Director at British Borneo Oil and Gas.Previously, he held several senior positions at Exxon Group. Martha Lane Fox Board Non Executive Board Job Title Director Since 2007 Ms. Fox has been a Director at Marks and Spencer Group since 2007. She is the UKs Digital Champion, the Chairman of Race Online 2012, and a Non Executive Director at Channel 4 Television. Ms. Fox is founder and Chairman of Lucky Voice, and of her own grant-giving foundation, Antigone. She was co-founder of lastminute. com. Jan du Plessis Board Non Executive Board Job Title Director Since 2008 Mr. du Plessis has been a Director at Marks and Spencer Group since 2008.He is the Chairman at Rio Tinto. Previously, Mr. du Plessis was the Chairman at British Ameri preempt Tobacco and a Non Executive Director at Lloyds Banking Group. He also ser ved as the Chairman at RHM from 2005 to 2007. Mr. du Ples sis was previously the Group Finance Director at Richemont, a position he held until 2004. Clem Constantine Board Senior Management Job Title Director, Proper ty Mr. Constantine is the Director, Proper ty at Marks and Spencer Group. He joined the company in 2006. Mr. Constantine was appointed the Group Proper ty and Retail Planning Director at Arcadia Group in 1999.He was appointed to his first finance directorship in 1993, for the IS brand at the Marks and Spencer Group plc MarketLine Page 13 Marks and Spencer Group plc Key Employee Biographies Bur ton Group, and moved through several other finance directorships with variable responsibilities including systems and retail. Mr. Constantine was trained as a coal tered Accountant at Stoy Hayward, and joined Debenhams in 1989 as a Financial Analyst. Tanith Dodge Board Senior Management Job Title Director, Human Resources Since 2008 Ms. Dodge has been the Director, Human Resources at Marks and Spencer Group since 2008.She was formerly the Group Human Resources Director at WH Smith since 2003. At WH Smith, Ms. Dodge was also responsible for Public Relations, Communications and Post Office Operations. Prior to this, she was the Senior Vice President Human Resources for Europe, Middle East and Africa (EMEA) at worldwide Hotels Group. Ms. Dodge also served as the Human Resources Director at Diageos two business divisions. She was also the International Human Resources film director at Prudential Corporation. Dominic Fry Board Senior Management Job Title Director, Communications and Investor RelationsMr. Fry is the Director, Communications and Investor Relations at Marks and Spencer Group. He joined the company in 2009. Prior to this, Mr. Fr y ser ved at Tulchan Communications. In 1996, he was appointed the Communications Director at J Sainsbury and ser ved in the same role at ScottishPower from 2000 to 2005. In 1989, Mr. Fr y became the Communications Director at AT&T in the UK before moving from there to head up c ommunications at the Channel Tunnel in the mid 90s. He star ted his career in 1982 working in PR consultancy at Traverse-Healy Regester and then Charles Barker.Jan Heere Board Senior Management Job Title Director, International Since 2011 Mr. Heere has been the Director, International at Marks and Spencer Group since 2011. He joined Inditex in 2002 where he held a several international roles, most juvenilely as General Manager for Inditex Russia. During 200002, Mr. Heere held various senior management roles at Zara, Groupo Inmobiliario Lupaco, and Charanga. He began his career at Manpower in Spain in 1997. Nayna McIntosh Marks and Spencer Group plc MarketLine Page 14 Marks and Spencer Group plc Key Employee BiographiesBoard Senior Management Job Title Director, Store Marketing and Design Ms. McIntosh is the Director, Store Marketing and Design at Marks and Spencer Group. She joined the company in 2005. Prior to this, Ms. McIntosh was par t of the Management Team that set up the p er una brand in 2001. Previously, she served as the Sales and Marketing Director for the George brand at Asda stores. Before joining George, Ms. McIntosh was at Next for four years as a Divisional Executive for the South of England. Steve Rowe Board Senior Management Job Title Director, Retail Since 2008 Mr.Rowe has been the Director, Retail at Marks and Spencer Group since 2008. He joined the company in 1989 and held a variety of positions in store management, having previously worked at Topshop as a Store Manager. Mr. Rowe joined Head Office in 1992 as a Merchandiser for Menswear. In 1998, he was promoted to Category Manager in the Furniture Depar tment. In 2001, Mr. Rowe led the team developing the Home Growth Strategy, working with McKinsey Consultants, and became Head of Home categories in 2003. He was promoted to the Director of Home a year later in 2004. From 2004 to 2008, Mr.Rowe was also responsible for Beauty and New Business Development. Darrell Stein Board Senior Managem ent Job Title Director, Information Technology and Logistics Mr. Stein is the Director, Information Technology and Logistics at Marks and Spencer Group. He has been working in IT for 17 years star ting his career at the company in 1990. Mr. Stein re-joined MS in 2006 as the IT Director. From 2001 to 2006, he ser ved at Vodafone, becoming IT Director for Vodafone UK in 2004. Prior to this, Mr. Stein was Vodafones UK Network Director and Global IT Strategy and Architecture Director.From 1996 to 2001, he ser ved at Ernst & Young, leading a number of major IT and Change Programmes in the financial services, retail and utility sectors. In 1994, Mr. Stein joined Mars as a Project Manager. Marks and Spencer Group plc MarketLine Page 15 Marks and Spencer Group plc Major Products and Services MAJOR PRODUCTS AND SERVICES M&S is one of the leading retailers of clothing, foods and homeware in the UK. The companys key products and services include the following Products Womens wear Mens wear Li ngerie Childrens wear Footwear Food and grocery items Homeware and home accessoriesKitchen and tableware Lighting Furniture products Services Credit cards Car, home, travel, and pet redress Personal loans Brands Autograph Limited Collection Collezione Blue Harbour Girls Boutique Per Una Ceriso Adored Truly you Marks and Spencer Group plc MarketLine Page 16 Marks and Spencer Group plc Revenue Analysis REVENUE ANALYSIS Overview The company recorded revenues of ? 9,740. 3 million (approximately $15,158. 8 million) in FY2011, an increase of 2. 1% over FY2010. For FY2011, the UK, the companys largest geographic market, accounted for 89. 7% of the total revenues.MS generates revenues through two business divisions food (51. 5%% of the total revenues in FY2011), and general merchandise (48. 5%). Revenues by division* During FY2011, the food division recorded revenues of ? 4,499. 4 million (approximately $7,002. 4 million), an increase of 1. 9% over FY2010. The general merchandise divisio n recorded revenues of ? 4,233. 6 million (approximately $6,588. 8 million) in FY2011, an increase of 2% over FY2010. *The revenue breakdown by division is barely for the revenues from the UK market. Revenues by geography The UK, MS largest geographic market, accounted for 89. % of the total revenues in FY2011. Revenues from the UK reached ? 8,733 million (approximately $13,591. 2 million) in FY2011, an increase of 1. 9% over FY2010. International operations accounted for 10. 3% of the total revenues in FY2011. Revenues from international operations reached ? 1,007. 3 million (approximately $1,567. 7 million) in FY2011, an increase of 4% over FY2010. Marks and Spencer Group plc MarketLine Page 17 Marks and Spencer Group plc bone Analysis deck out ANALYSIS M&S is one of the leading retailers of clothing, foods and homeware in the UK.The company has expanded its food product offering signifi thunder mugtly in the recent years. New products launches, focalise on expanding healthy products, promotions, and competitive prices are all helping the company attract customers in a highly competitive market. However, surge in steal could negatively impact the cost structure for M&S. Strengths light-colorednesses Expanding food offering unwavering market position in the clothing segment geographic involution to increase the addressable market and reduce vulnerability to raise UK market M&S etched a highly utile CSR schema M&S bequest stores and systems are a ompetitive disadvantage Declining general merchandise division gross gross revenue due to inadequate stocking Opportunities Threats Online channel rests to ace and will enable M&S to boost revenues localize on China and India can lead to refinement in two of the meteoric increase markets Surge in shoplifting losses be the retailers and customers Weak consumer spending in the UK Rising labor cost in the UK Strengths grow food offering The company has expanded its food product offering significantl y in the recent years. In 2009, M&S systematically highlighted it is cheaper than Waitrose on a basket of 1,200 items by about 2%.The company, in 2009, decided to invest in its margins in order to provide its customers better(p) value. As a result of this, M&S saw improved perceptions of value by its customers. The company, in FY2011, launched around 1,800 new products in food and positioned itself as the UKs leading high quality food retailer. The key product launches of the company include Taste Italia, and Made Without Wheat range of gluten-free bread and cakes, With the success of Made Without Wheat product range, the company launched gluten-free sandwiches, sausages, stuffing, and crisp bakes.As of FY2011, the company offered 125 gluten-free products. M&S also became the UKs second largest favorite health food brand with the launch of its Simply Fuller Longer range which encourages customers to manage their weight with a identity card plan. The gross margin of food division change magnitude by 20 basis points to Marks and Spencer Group plc MarketLine Page 18 Marks and Spencer Group plc SWOT Analysis 30. 8% in FY2011. This was mainly driven by better management of promotions and waste. Fur ther, in the four th quar ter of FY2012 ended March 2012, M&S launched 500 new products in the food division.The sales in this quar ter increased by 3. 1%, The companys promotions such as roast dinner for ? 5 ($7. 8), Dine In, etc offered its customers with considerable value solutions for special occasions. M&S food division has been acting well in a ver y competitive market and against problematic competitors. By launching innovative products and with an expanded food offering, the company has been able to attract the customers in a highly competitive market. Strong market position in the clothing segment M&S has a muscular market position in the clothing segment.With more than one in 10 clothing items bought from M&S, the company ranks amongst the three large st clothing retailers in the UK. According to a repor t released by Verdict (Datamonitors retail arm) in May 2012, MS is k forthwithn for its product quality. The company was ranked first with a score of 49 for its product quality above the market average of 23. According to another repor t released by Verdict in April 2012, MS enjoys highest conversion rate of 50. 7% and is very successful in conver ting visitors to loyal main users through its varied product offer, in-store service and garment quality.This indicates that MS is a trustwor thy brand, which all main users would hand over to knowing that the quality, fit, and ser vice are reliable and consistent. The retailer has recognized that its core market of predominantly suppurate customers has been especially hard hit by rising core cost of living, falling interest on savings and worse prospects for pensions, and in chemical reaction has lowered its entr y prices to compete more effectively with high street/value operators a nd supermarkets, helping to maintain the loyalty of its main users and prevent them from shopping elsewhere.Verdict, in its repor t in March 2012, ranked, MS 7th in the global depar tment store market with a share of 3. 2%. This market leadership enabled MS to excel throughout the stinting downturn, while other mid-market retailers are pressured from the ever expanding value players. Leading market position indicates access to a large customer base and also popularity of MS offering in the clothing segment. Going forward, this market position would enable the company to drive revenues as consumer spending recovers.Geographical enlargement to increase the addressable market and reduce vulnerability to mature UK market With a por tfolio of over 361 owned and franchised stores in 42 territories M&S continues to grow its international business. This mix of ownership models and countries enabled the company to serve well in FY2011, even when individual markets were weak. Fur ther, duri ng FY2011, the company entered the Egyptian market with a 28,000 square feet store in the Dandy Mega Mall in Cairo. M&S international business grew by 4% in FY2011 despite tough frugal situation.As an established retailer in a mature market, it is going to be hard for MS to continually deliver significant increases in UK sales. However, in the long run, its international business offers an oppor tunity for high gain. By generating much higher volumes, it can deliver margin benefits with suppliers. With production costs rising, this will be an advantage in the UK. International expansion will enable the company to access multiple sales points for most of the product ranges. This is especially relevant for clothing and homewares segments.Also, through expansion in the international markets MS can reduce Marks and Spencer Group plc MarketLine Page 19 Marks and Spencer Group plc SWOT Analysis vulnerability to mature UK market. The company can also par ticipate effectively in some of highest growing markets such as China and India. All these factors would enable the company to reduce the overall business risk and facilitate increased revenues. MS etched a highly effective CSR strategy MS has to its credit an effective corporate social responsibility (CSR) strategy.CSR has been gaining prominence not just among the stake holders and governments but the consumers as well. The company has the highest propor tion of consumers believing it to be a responsible retailer and this can largely be attributed to the success of its Plan A, a ? 200 million (approximately $320. 3 million) 100-point plan launched in 2007 with five areas of focus climate change, fair par tnership, health, sustainable raw materials, and waste. In FY2011, the company include two more areas in its Plan A involving customers, and fashioning Plan A how we do business.In the last few years, initiatives launched under the Plan A banner include launching the companys first eco-store, encouraging suppli ers to set-up eco-factories, removing hydrogenated fats from its ready meals, increasing the propor tion of organic food, reducing the sodium chloride content of its produce, cer tifying a larger percentage of its fish as originating from sustainable populations, and beginning to sell recycling and composting bins. It is the high profile nominal head of Plan A in adver tising campaigns, product labeling and store signage that gives M&S one of the best consumer perceptions of a retailer for social responsibility.The campaign plant not just as a direct to consumer channel, but also because of the positive coverage it creates. Perhaps more impor tantly, it has publicized all of these initiatives extensively. In 2008, M&S launched a TV adver tising campaign focusing on its ethical, environmental and health-conscious credentials, highlighting that it only uses free range eggs and that its products are now free from ar tificial colors and flavorings. Other, more innovative, ideas view as included a joint venture with Oxfam to promote the recycling of old clothes.In addition, more controversially, the retailer introduced a 5p charge for carrier bags at all of its food depar tments in 2008. Though many consumers resented this charge, it has undoubtedly boosted M&S re baffleation as an ethical retailer. Overall, sculpting its CSR strategy into such a high publicity campaign, divided into such sportsmanlike action points and highly transparent benefits, has seen the company move to the forefront of responsible retailing. In FY2011, the company launched indigo plant Green, its first range of clothing made using more sustainable fabrics.In April 2012, the company announced to accept secondhand clothes at all the UK outlets except Simply Food stores, to recycle them into other fabrics or to reuse them in order to cut waste. Plan A has seen CSR become core to MS principles in the eyes of the consumer and it has reaped the benefits of this, gaining shoppers as a resul t and repor tedly saving more than ? 70 million (approximately $108. 9 million) in efficiencies gained in FY2011 compared with ? 50 million (approximately $77. 8 million) in FY2010.In addition, M&S improved energy efficiency in its stores by 23% and warehouses by 24% in FY2011 compared to FY2007. It also improved the fuel efficiency of its deliver y fleets by 20% and total carbon emissions subscribe been reduced by 13%. The company now recycles 94% of all the waste it generates from its stores, offices and warehouses. The total waste is down by more than a third. M&S also met its sustainable standards by sourcing 90% of softheaded fish in FY2011 (62% in FY2010) and 76% of wood in FY2011 (72% in FY2010). Marks and Spencer Group plc MarketLine Page 20 Marks and Spencer Group plcSWOT Analysis By actively promoting a products greener attributes (for role model fewer, more recognizable and natural ingredients), retailers such as MS pee-pee positioned products as improving ones perso nal environment while benefiting the global environment too. Many of their successes ease up come from emphasizing the former rather than the latter, especially as consumers often associate ethical motive with a sense of wellbeing. In terms of the issues that concern consumers, the sustainability of natural resources is a major fear, as are climate change and the fairness of sourcing arrangements.Consumers are also attracted to products with health benefits and there is a clear trend that consumers can be persuaded to par t with more money in return for products with a positive impact, not just to them personally, but also to wider society. Indeed, differentiating in the midst of products becomes harder and harder to achieve, Verdict expects consumers to turn to auxiliary considerations such as ethicality and sustainability to guide their choices. Consumers are no longer purely satisfied with how a product looks and functions they pauperism assurances over aspects such as nviron mental impact, hygiene, safety, and fairness. In light of the above mentioned trends where the customer choices are increasingly guided by the sustainability issues, M&S will benefit due to its reputation of being a responsible retailer. Weaknesses M&S bequest stores and systems are a competitive disadvantage M&S suffers some competitive disadvantages compared to Tesco, which has been able to drive earnings before interest and revenue (EBIT) growth even in the mature UK market. Tesco benefits from supplier power and state-of-the-ar t IT, supply chain and systems compared with M&S legacy systems.The supermarket retailer has been able to break up the demand cur ve with metro, emit and big box store formats out of town and on the high street. Moreover, Tesco stores have been carefully designed with consistent store layouts in order to facilitate store navigation. Extra back room store s abuse has also been allocated to allow for smooth execution of its picking and distribution model. Tesco sells both own label and branded goods (food and non-food) in a bid to drive up footfall and sales conversion. M&S legacy stores are inconsistent in terms of layout.Store size tends to dictate product availability, while a lack of back room store space does not facilitate the same style supermarket pick and delivery model. The legacy systems and stores of M&S are constraining effective servicing of customer demands on a consistent basis. This is placing the company at a clear competitive disadvantage compared to a formidable opponent, Tesco. Declining general merchandise division sales due to inadequate stocking The companys general merchandise division sales declined in recent times, M&S general merchandise division sales decreased by 2. % in the four th quar ter of FY2012 ended March 2012. This was mainly due to shor tage of stock in its stores, Due to this, the company was also not able to meet customer demand for 300,000 knitwear garments under the M&S Woman label. It onl y sold Marks and Spencer Group plc MarketLine Page 21 Marks and Spencer Group plc SWOT Analysis 100,000 knitwear garments during this period. Fur ther, in times of high demand, inadequate stock could hamper the sales of the division and result in loss of sales to competitors.This not only affects the revenues of the company but could also result in shift of customers to its competitors. Opportunities Online channel continues to boom and will enable M&S to boost revenues Online retail sales in the UK have grown significantly over a period of time. According to Office for National Statistics, non-seasonally modify average weekly value for internet retail sales in the UK was ? 414 million (approximately $644. 3 million) in Februar y 2010, this increased to ? 573. 6 million (approximately $892. 7 million) in February 2012, representing an increase of 18%.Internet sales accounted for only 8% of the total retail sales (excluding fuel) in Februar y 2010. This inning increased to 10. 7% in February 2012. The growing desire for convenience is see shoppers buy more online, especially in the category of food and grocery. Consumers have also become savvier, using the internet more to get the best deal they can. Voucher codes, and cashback sites have been instrumental in this. Additionally, improved deliver y and fulfillment options have been encouraging consumers to shop more online.The company operates in the internet channel through M&S Direct where the products are offered through website and newly launched Shop Your Way facility, a new ordering service that has been rolled-out in 444 stores (including 151 in Simply Foods stores) during FY2011, allowing customers to place orders either in stores, online or over the phone, for deliver y to either a nominated address or free of charge to their nearest store. M&S Directs sales increased from ? 413 million (approximately $642. 8 million) in FY2010 to ? 543 million (approximately $845. million) in FY2011, an increase of 31. 5%. Fur ther, in the first half of FY2012, M&S Directs sales increased by 11. 7% with more than three million visitors per week. Thus, by leveraging its online presence, M&S can cater to the requirements of a growing number of customers who are looking for convenience and better deals over the internet. Focus on China and India can lead to expansion in two of the fastest growing markets China and India are two economies which are written text highest growth rates which, in turn, are expected to aid the retail market growth in these two countries.Asias retail sales are estimated to increase with China driving the growth. According to the preliminary estimation, the gross domestic product (GDP) of China was CNY47,156. 4 trillion ($7,285. 7 billion) in 2011, a year-on-year increase of 9. 2% at comparable prices. The fast pace economic development in China coupled with the rise of the center field class income group and their increasing disposable income have fur ther pushed up the demand for several consumer goods. According to National Bureau of Statistics of China, the total retail sales reached CNY18,391. 9 billion (approximately $2,841. billion) in 2011, representing a year-on-year nominal growth rate of 17. 1%. Fur ther, according to industr y estimates, the countr ys total retail sales are expected to increase from approximately CNY20 trillion ($3 trillion) in 2012 to approximately CNY26 trillion ($4 trillion) in 2016, representing an increase of about 30%. Strong Marks and Spencer Group plc MarketLine Page 22 Marks and Spencer Group plc SWOT Analysis underlying economic trends, population growth and the increasing wealth of individuals are key factors that give way to the retail market expansion in China.The retail industriousness in India is large owing to a large population and is set to grow as several factors contribute. According to the industry sources, the retail sales in India are forecast to grow from around $411 billion in 2011 to $804 billion by 2015. The key factors behind the forecast growth include unwavering underlying economic growth, population expansion, increasing wealth of individuals and the rapid crook of organized retail infrastructure. Also, as middle and upper class consumer base expands, there will also be oppor tunities in Indias second and third-tier cities.The greater availability of personal credit and a growing fomite population are to improve mobility which will also contribute to a trend towards retail sales growth. MS is strengthening presence in India and China as par t of its geographic expansion and for some time to come, these countries would be the key contributors to the companys international expansion strategies. The company in with par tnership with Reliance Retail, an established retailer in India, can tap into this lucrative market while expansion in China also continues. Indian and Chinese markets would provide a huge potential revenue base for M&S.Threats Surge in shoplifting losses costs the retailers and customers The UK retailers are exposed to increased costs of shoplifting. Shoplifting has assumed massive propor tions in recent times. According to industry estimates, retail crime costed UK stores ? 1. 4 billion ($2. 2 billion) in 2011. thither are about two million thefts per year, which concludes to an average of more than one per minute. According to another industr y repor t, the thefts across the UK stores increased from ? 4. 2 million ($6. 5 million) in 2009 to ? 5. 1 million ($7. 9 million) in 2011, an increase of 20%.Long-term trends also show the figure is likely to continue rising. As a result, retailers have been increasing their surveillance spend. This is increasing the costs for retailers as well as for the end consumers. The shoplifting losses are adding to the costs for the retailers and the customers have also been bearing the brunt. The surge in shoplifting could negatively impact the cost structure for M&S as well. Weak consumer s pending in the UK The UK market is suffering from weak consumer spending. The European debt crisis added more downward pressure to the growth prospects of the UK.According to Eurostat, the UK economy grew by 0. 7% in 2011 and is expected to grow by 0. 5% in 2012. In addition, the UK has witnessed high unemployment rate. According to the Office of National Statistics, the unemployment rate for the three months period November 2011 to January 2012 was 8. 4% with 2. 67 million unemployed people in the UK. Increasing unemployment rate is expected to fur ther put pressure on the economy of the UK. High inflation, led by the increase in tubful to 20% and public spending cuts reduced disposable Marks and Spencer Group plc MarketLine Page 23 Marks and Spencer Group plc SWOT Analysis income, leading to a fall in consumer spending on discretionary items. Consumers have been cautious with their spending especially due to soaring petrol prices, tax increases and uncer tainty over jobs. The UK is the key market for M&S. In FY2011, the UK accounted for 89. 7% of M&S total revenues. Thus, the sluggish consumer spending and high unemployment rate in the UK could affect most of the non-food retailers and lead to reduced sales volume or shrinking profit margins. Rising labor cost in the UK take costs are rising in the UK. In recent times, besotted labor markets, increased over time, government mandated increases in lower limit hire and a higher propor tion of full-time employees are resulting in an increase in labor costs, which could materially impact the companys results of operation. The National token(prenominal) Wage (NMW) Regulations came into force in 1999 and since then the NMW rates have been increased annually. The national minimum wage increased from ? 5. 93 per hour ($9. 23 per hour) in October 2010 to ? 6. 08 per hour ($9. 46 per hour) in October 2011.Fur ther, the national minimum wage is expected to increase to ? 6. 19 per hour (9. 63 per hour) from October 2 012. In FY2011, M&S employed 78,169 people. Increasing labor costs can adversely affect the companys operating costs as its wage bills would escalate. This, in turn, could impact its margins adversely. Marks and Spencer Group plc MarketLine Page 24 Marks and Spencer Group plc Top Competitors TOP COMPETITORS The following companies are the major competitors of Marks and Spencer Group plc ASDA Group Limited Debenhams plc H M Hennes Mauritz AB J Sainsbury plcNEXT plc Selfridges plc Tesco PLC Gap, Inc. , The French Connection Group Plc House of Fraser Group Plc John Lewis Par tnership plc Arcadia Group Limited Home Retail Group Plc Marks and Spencer Group plc MarketLine Page 25 Marks and Spencer Group plc Company muckle COMPANY VIEW A statement by Rober t Swannell, the Chairman of the Board at Marks and Spencer Group, is given below. The statement has been taken from the companys Annual Repor t for FY2011. I feel ver y privileged to be Chairman of this unique company and at such a n exciting time in our evolution.Since joining Marks Spencer in October and assume the role of Chairman in Januar y, I have spent much of my time getting to know the business better meeting our employees, shareholders, customers and suppliers. I first became deeply involved with MS during the unsolicited coup attempt in 2004, when I led the advisory team that helped put the MS case to its shareholders. It was then I learned first hand about this unique company about the extraordinarily strong relationship it has with its many stakeholders and about its very special ethos.This ethos is a disapproval of the high standards our customers expect from MS trusting us not only to deliver great value, great quality products but also to do the right thing socially, environmentally and ethically. We know that putting Plan A at the hear t of how we do business is not just the right thing to do it is also fundamental to our long-term success. Performance In a challenging marketplace MS ha s continued to grow, with underlying profits up 12. 9% on the year.We delivered this by staying true to our heritage of quality and innovation, reminding our customers what makes MS special. This year Marc Bolland set out a clear medium-term plan for the business, after extensive discussions with colleagues and us, the Board. This is cover in detail in Marcs review. From day one, I have been struck by the passion and commitment of our people. I am rapturous that this year we are paying a bonus to all employees to convey them for their energy and fervency in what has been a difficult trading environment. DividendWe are committed to delivering consistent returns for our shareholders. To this end we have adopted a reform-minded dividend policy, with dividends broadly covered twice by earnings. We intend to pay a final dividend of 10. 8p per share (last year 9. 5p) in respect of the 2010/11 financial year. Governance Marks and Spencer Group plc MarketLine Page 26 Marks and Spencer Group plc Company View This year we returned to the traditional governance structure of a separate Chairman and Chief Executive, providing clarity between Marc Bolland and me, with regard to our individual roles.Put simply, I run the Board and Marc runs the business. The Board has a wide range of responsibilities. There are three that I think are par ticularly impor tant for the success of the business first, to debate and agree our strategy and hold the executive team accountable for its execution second, to ensure that we have the most talented team to execute this strategy and that we plan effectively for era and third, to set the tone for governance, which is par ticularly impor tant at MS where doing the right thing is an integral par t of our ethos. My ob is to ensure the Board has the right mix of skills and talents and to ensure that it works effectively as a team towards shared goals with the right mix of enquir y and suppor t of the executive directors from the non-execu tive directors. During the year we commissioned a formal Board evaluation from an strong-minded consultant, the findings of which are outlined in the Governance section. This process highlighted the real enthusiasm of the directors in suppor ting a shared ambition to guide MS to the ver y best future. We know that you expect high standards from MS its our responsibility to learn how we can improve.This review was an impor tant par t of that journey. As stated in our 2009/10 Annual Repor t, we reviewed the senior remuneration structure this year. Following extensive shareholder consultation, we believe we now have a framework that is both relevant to todays MS and fully aligned with our strategy. The Board Over the last year the Board has been strengthened by a series of executive appointments. In May 2010 Marc Bolland joined the business as Chief Executive, assuming the day-to-day running of the business from Sir Stuar t Rose in July.In October Alan Stewar t joined as Chief Financ e Officer and in February we announced the appointment of Laura Wade-Gery as Executive Director, Multi-channel E-commerce she will join the Board in July. Whilst the Board features some new faces, these changes have taken place around a core of executive and non-executive directors that has remained stable over recent years. I would like to pay par ticular tribute to Sir Stuar t Rose. When he became Chief Executive in 2004, MS was at a low ebb.He restored confidence in MS, re-established its determine and build a strong business. The solid platform from which Marc is now implementing his plan is a credit to Stuar ts energy and tireless commitment to MS over the last seven years. The smooth management inflection the meticulous handover to me and the suppor t of Marc is also a credit to Stuar t. In that connection, I would also like to thank Sir David Michels, and the Nominations Governance Committee he led, for managing a change of leadership over the past year that was accompl ished softly and effectively.David has decided to step down from the Board at the end of his second term in February 2012, but I am delighted that he will continue his role as Deputy Chairman until then. Marks and Spencer Group plc MarketLine Page 27 Marks and Spencer Group plc Company View I must also thank Louise Patten for the significant function she has made over the last five years, playing an impor tant role in each of our Board Committees. As Louise reaches the end of her second three year term on the Board, she has decided not to seek re-election at the upcoming AGM. Looking aheadOur priorities for the year ahead are clear. We have a plan and it is now our collective job to make it happen. The Board will concentrate on delivering exemplary governance at the highest level to enable our executive team to drive this strategy forward. The economy still gives us reason to be cautious. Yet in difficult times, our core values of Quality, Value, Ser vice, Innovation and Trust m atter more than ever to MS customers. These values remain at the hear t of our strategy and I therefore look forward to the future with confidence. Marks and Spencer Group plc MarketLinePage 28 Marks and Spencer Group plc Locations and Subsidiaries LOCATIONS AND SUBSIDIARIES Head Office Marks and Spencer Group plc Waterside House 35 Nor th Wharf Road London W2 1NW GBR P44 20 7935 4422 http//www. marksandspencer. com Other Locations and Subsidiaries Marks and Spencer International Holdings Limited striking Britain GBR Marks and Spencer (Nederland) BV NLD Marks and Spencer (Ireland) Limited IRL Marks and Spencer (Asia Pacific) Limited HKG Marks and Spencer Simply Foods Limited Great Britain GBR Marks and Spencer Marinopoulos Greece SA GRC Marks and Spencer SCM Limited