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Chairman's overview

by Sir Stuart Rose


Trust In March we launched ‘Your Green Idea’ a major Plan A competition, offering a chance to win £100,000 to ‘green’ an organisation, such as a school or a local community group.

Your Green Idea invited people to share their ideas for new, ‘green actions’ that M&S could implement under Plan A, so that all of its 21 million customers can get involved in helping the environment.

For more information about Plan A see here or visit

“Leading your very special business for the last six years has been a pleasure and a privilege.”

A platform of growth

This year M&S returned to growth, demonstrating the resilience of the brand through difficult times. 2009/10 has been about leading the business through the recession without losing sight of our long-term plan or our core values.

We remain committed to building a world-class retailer through increasing the pace of change and driving operational excellence in the business; building our multi-channel capability; growing our international portfolio; and, as the economy returns to a stronger footing, reinvigorating our brand communications.

Our progress was interrupted – but not altered – by the recession. Last year, we continued to implement short-term objectives to guide M&S through the economic downturn. As a result of this decisive action our long-term strategy remains in place. We have built a strong platform for growth and have improved or maintained market share in all our core areas.

We grew because we managed our costs prudently, listened and responded to our customers' changing needs and stayed true to our core values of Quality, Value, Service, Innovation and Trust, reminding our customers of what makes M&S different. This year we have worked hard to further improve our quality and our customers have told us they have noticed this improvement.

A year ago, I told you the Board had cut the dividend by 20.9%. This was not an easy decision but it gave us the flexibility to continue to invest in the business despite the downturn. Although we scaled back investment in new stores, we continued to invest in our infrastructure, particularly our supply chain and IT systems.

We also invested in our margins, to give customers the extra value they were looking for without compromising quality. Whilst some retailers attempted to meet this need by repositioning themselves as ‘low cost’, M&S continued to stand for value and not just price &ndash an approach that is serving us well as consumer confidence returns.

Despite the economic challenges, we have also renewed our commitment to Plan A, our eco and ethical plan. We know environmental issues matter to our customers and that the recession has not altered their level of concern. They continue to look to M&S to lead the way, so this year we set out our vision to become the world’s most sustainable major retailer by 2015.

Since its launch in 2007, we have moved from the implementation of Plan A to making it the key driver of how we do business. In doing so, we have become more efficient and in 2009/10 alone Plan A generated £50m additional profit, which has been invested back into the business.

This year I worked with the Board to identify Marc Bolland as my successor as Chief Executive. Though we remain cautious about the year ahead, the worst effects of the recession are behind us. Furthermore, M&S is in a stronger position and I am convinced that Marc is the right man to lead the business forward, as he brings a wealth of experience to the role. As Chairman, I will continue to work with the Board and with the management team to ensure a smooth transition until I leave the business.

Our performance this year*

Marks & Spencer has had a good year, with our adjusted profits up 4.6% on last year to £632.5m. Before the £80.9m bonus we paid to our colleagues to thank them for their extraordinarily hard work, profits were at £713.4m, a 17.5% increase on 2008/09.

You will see from Ian Dyson’s performance overview that Group sales increased by 3.2%. Positive UK like-for-like sales have returned, up 0.9% and we have seen growth across all parts of the business, as the external market conditions improved and our customers became more confident.

Food has now delivered a sixth consecutive quarter of growth. As outlined in John Dixon’s review this has been achieved by better value, availability and product innovation, whilst continuing to deliver outstanding quality. The pace of development in Food will not slow and this year we committed to renewing 25% of our food range every year.

Our clothing market share continues to grow, up 0.3% to 11%, as our customers have started to invest in their wardrobes again. Feedback from them tells us we have got the products right and are in touch with the latest trends. As set out in Kate Bostock’s clothing review we’ve responded to customer requests for an easy to wear, casual range, with the launch of Indigo Collection. We have also used our ‘good’, ‘better’ and ‘best’ pricing structure to ensure we continue to offer something for everyone, making it easy for our customers to trade up and down within M&S to suit their priorities and budgets.

We remain focused on helping our customers shop with us whichever way they want, bringing together our various shopping channels to provide greater convenience and flexibility. As explained here, this year we launched ‘Shop Your Way’, a new ordering service that has been rolled-out to over 300 stores, allowing customers to place orders either in stores, online or over the phone, for delivery to either a nominated address or free of charge to their nearest store.

Our International sales were up 5.7%, despite difficult trading conditions in the Republic of Ireland and Greece. We remain confident in our International growth plans and this year we have focused on building sustainable businesses in emerging economies such as India and China.

Improvements across M&S are a result of our consistent delivery of quality and value to our customers. Through good times and through adversity we have remained true to our core values. It is these values that continue to set M&S apart from the competition and I believe they are more relevant than ever before in our 125 year history.

*52 weeks


Our customers know they can trust us to do the right thing and nowhere is this better demonstrated than through Plan A. This year we raised the bar – setting ourselves the ambitious goal of becoming the world’s most sustainable major retailer by 2015.

Our extended Plan A will reach further and move us faster – covering every part of our business and reaching out to our 2,000 suppliers in the UK and overseas and into the homes of our 21 million customers.

We are also encouraging our 76,000 employees to live ‘greener lifestyles’ and this is explained in more detail in our people section. As part of this all M&S employees are now entitled to a paid volunteer day – so that we can give something back to the communities we serve.

By 2020 we aim to convert the 2.7 billion individual M&S food, clothing and home products sold each year, to ‘Plan A products’, so that each carries at least one sustainable or ethical quality. In doing so, we will make a positive contribution to the environment and society across everything we do and everything we sell.

Plan A is not just the right thing to do ethically, it also makes commercial sense. By further embedding sustainability into the way we do business we will continue to become more efficient, develop new markets and build customer loyalty.

125th anniversary

Against the backdrop of recession, our 125th anniversary celebrations served as a rallying call to remind both customers and employees of the values M&S has stood for throughout its 125 year history. To this effect, we brought back the Penny Bazaar under the original slogan – ‘Don’t ask the price it’s a penny’ – attracting over three million customers in just three days.

As part of the celebrations we also set our employees a target of raising £1.25m in just 125 days. Across the country, employees rose to the challenge, more than doubling this target to raise £2.8m benefiting over 500 local charities.

Foundations for the future

In October we held an Investor Day to explain in more detail our long-term change programme, which we launched a year ago as Project 2020. This year we have begun to accelerate the pace of activity to fundamentally transform the way M&S does business. It is:

  • delivering a step-change in the way we service our customers’ needs and the way we operate our business;
  • increasing the pace of change and operational execution;
  • accelerating Multi-channel; and
  • drive our International business.

Our investment will not only create a solid platform for future growth but will also deliver tangible customer benefits – from improved on shelf availability to more convenient delivery times.

Handing over a stronger business

As we welcome Marc Bolland as our new Chief Executive, I would like to reflect briefly on what has been achieved over the past six years. Marks & Spencer is a significantly stronger business today than it was when I became Chief Executive in 2004.

We have taken the business back to its core values of Quality, Value, Service, Innovation and Trust. We reconnected with our customers and employees by focusing on these values and launching the successful ‘Your M&S’ campaign, as well as Plan A.

Our revenues have grown by £1.9bn, with International revenues doubling since 2004. We have significantly expanded our UK store base, from 375 stores to almost 700 today including putting M&S in previously under-represented locations – like out of town and retail parks.

We have revitalised our clothing offer, filling the gaps in our ranges, keeping up to date with key trends and making our prices much more competitive. We now offer stylish, good value and great quality products for all our customers – regardless of their age, lifestyle or budget. Six years ago, for example, only 12% of our total clothing offer was at our opening price points, compared to just under a third today.

The growth we’ve seen in our market share shows us that this approach is working. We have strengthened our performance across all areas of clothing – in womenswear, lingerie, menswear and kidswear – and our market share has risen to 11%.

We have also built up our position as the UK’s leading retailer of good quality, fresh food. We have driven innovation while staying true to our quality and ethical sourcing principles. We have improved our pricing and made our Food offer more convenient. We now have 350 Simply Food stores across the UK – in locations such as high streets, railway stations and airports – up from 100 in 2004.

Meanwhile we have made significant, long overdue investment in the business. Our total capital expenditure has been around £3.5bn of which £2.2bn has been invested in stores. Over 80% of our store portfolio has been completely renovated and we are building new logistics and delivery systems, which are essential to the future of our business – especially our two key areas of growth of Multi-channel and International.

We have also invested in our people – with training and career paths – and we reinstated an active customer feedback programme. We know our customer service has improved because of this. Our mystery shopping scores currently stand at 89%, up from 70% when we introduced this measure in 2006.

Finally, over the same period, I am pleased to say that we have given back around £4.6bn to our shareholders in dividends and buy-backs.

The M&S team

Marc will be able to benefit from the wealth of experience within the management team that has led M&S over the last year.

In 2009, I announced that Kate Bostock would take responsibility for our Home division, bringing our entire General Merchandise offer under her leadership. Over the last 12 months we have seen the benefits of this, with greater collaboration and shared learning across the GM business units. Similarly, the management of all our shopping channels transferred to Steve Rowe, allowing us to better focus on our ambitions as a multi-channel retailer.

In September, John Dixon was promoted to the Board as Executive Director of Food. Since his appointment as Director of Food in July 2008, John has been instrumental in improving the performance of the Food division and returning it to positive like-for-like sales.

In May 2010, Ian Dyson resigned from his position as Group Finance & Operations Director to join Punch Taverns plc as their Group Chief Executive. On behalf of the M&S Board, I would like to thank Ian for the significant contribution he has made to M&S over the last five years and wish him well with his future career.

Our management team has worked together throughout the recession, focusing on both our long and short-term priorities, enabling the business to emerge stronger and ready to capitalise as the economy recovers.

The progress we have made would not have been possible without the hard work and commitment of our dedicated workforce – particularly during the challenge of a recession. I am delighted that we have been able to pay all our staff a bonus this year. I would like to say a personal thank you to all of them.

It has been a great pleasure and a privilege to lead your very special business over the past six years. I am confident that with our strong foundations in place, our core values revitalised and a brand that inspires confidence and recognition worldwide, M&S is poised for a new exciting era of growth under the direction of a new Chief Executive.

Sir Stuart Rose signature Sir Stuart Rose, Chairman
Management Board

Meet our Management board

Find out more about our Management board.

Well Suited Over the last 12 months we’ve strengthened our share of the menswear market to 10.4% by value. We’ve sharpened our brands, such as Collezione, featured right, which we relaunched in February.

Find out more about the work we have done here.