Marks and Spencer - Preliminary Results 2010

You need Adobe Flash player to view this content.
You can download it the flash player here

You're watching our latest programming from Marks and Spencer

Coming up

Registration
Simply fill out the form below and get instant access to our content.

Transcript excerpt:

This is your last set of results. Are you pleased with them? And does it show a business that's back on track?

Yes, what I think what we set out to do last year, which was to get the business through the recession, has been accomplished, and I'm pretty pleased with this set of results.

And what have you done over the year to achieve that?

Well, we've worked very hard on doing two things. The first thing we didn't want to do is to move away from our strategic objectives, but we obviously knew we had to put in some tactical actions to make sure that we got through the tough times that our customers were facing.

So we looked very hard at costs, we've looked at our innovation in the business. We've looked at our pricing in the business. We've worked very hard to give customers what they want; they have begun to respond. And I'm pleased to say that as we've come out of the end of this year we're growing in total sales terms in foods and in textiles and in like-for-like terms too.

Is there anything in these numbers that supports the view that this kind of performance is sustainable?

Well I believe it is sustainable. I think it's sustainable for a longer term reason. And that is that as I come to the end of my tenure here I have to reflect on what we've done. And we have done is we have heavily invested in this business, in our stores, in our products, in our infrastructure and I believe that is beginning to come through.

And I think the good news is for Mark Boland who takes over from me very shortly is that, he has got a vehicle now which is capable of being driven forward and it's up to him to decide how he wants to drive it.

And what's current trading looking like?

Well current trading is on track. Our fourth quarter was pretty robust. We don't report the first quarter of this financial year until July 7th, but so far so good.

And what's the outlook then?

Well the outlook is obviously a little bit uncertain. We've just had a general election. We seem to have a very energetic new Government. I think the coalition actually will prove to be a benefit; it will allow the Government to take some pretty radical steps. But there's the uncertainty of the budget coming on 22 June and clearly people will find that their pockets are a bit squeezed. But I believe that we as a business, with the products and the services and the offer that we've got are pretty well placed to compete vigorously in the market.

Let's talk about general merchandise. You delivered an improved performance throughout the year, what was that down to?

It was down to getting down to making sure the customers got the right products when they came into the stores. I think our offer is the best it's been for the last two years. I think across ladies wear, men's wear, lingerie and kids wear we've got some great styling, some great fashion and we've absolutely kept the nail on pricing. And we're very competitive and that's been proven by the fact that our market share has improved over the last 12 months.

How did that all translate into market share? What did you see? And are you holding your own in terms of [inaudible]?

No, we're growing market share. We're actually growing [value?] markets. I think it's up by about 30 basis points on the year. And that's a very strong performance in a market which is very unforgiving. I'm pretty pleased with the performance on clothing.

Now you launched a series of ranges throughout the year, but critics say too many and that they're confused about some of these ranges. Is that fair criticism?

Well listen, there's always somebody out there. I regard the analysts in the same way as I regard our customers; they've all got their own opinions. But I think that only reflects on the sort of business that we are; we're a very broad church. We look after customers right the way through from birth to the very late old age. They come in all sorts of shapes and sizes, they have all sorts of shapes and sizes in terms of their pockets and their needs and their wants. And we try and fulfil all those needs and wants. So, there's always going to be somebody who says I would do it a different way. .

I'm sure Mark with a fresh pair of eyes will say we could edit this range this way or that range that way. And I'm sure there will be change as we go forward. But I think actually our offer is pretty good.

Whilst we're on brands, what about Per Una; has that seen an improved performance now that's been integrated into the business?

Our whole women's wear department has seen improved performance. What we've done over the last year is to make sure that we reviewed all the brands to make sure that they are carefully edited. And that editing process has also taken Per Una under its umbrella. Kate's now responsible for that whole area. Per Una did have a tough time back at the end of 2008 early part of 2009, but I think the ranges are back on track and Per Una is growing again. So I'm pretty pleased with that performance.

And it seems there's been a difficult trading environment for home?

Well home's been a bit tough. I mean, large ticket items did obviously slow down the recession. But we introduced a policy which was 'Improve, don't move'. We put better accessorisation in, in the home division. We've given customers lots of choice on things that they can do to make their existing homes more exciting with affordable merchandise, and we're again beginning to make progress.

So I think actually, all in all, as we look back at the beginning of 2009 to the end of 2009 or 2009/10 financial year, we've seen what we have done in our business coming to fruition, in terms of fulfilling customers' needs and expectations. And they have responded with giving us their business, and that's a pretty good place to be.

How much of an improvement do you think food is making?

Well food is back on track. It's a well known fact that we had a wobble some two years ago. A wobble which was self inflicted probably 50% and inflicted by the market another 50%. We had a serious management change which has seen two years or so now. We put John Dickson into the food division. We said that we'd get the business back on track and we've now had six quarters of improved performance and I'm pleased to say that like-for-like sales are on the up again. That is down to sheer hard work in terms of making sure that availability is right, that ranging is right, that pricing is right. And we've invested a lot in pricing over the last 18 months. We've improved the level of innovation. And hey presto the business is beginning to move.

And I also think there has been a [see?] change in terms of the consumer, who has now recognised that what you get is what you pay for and that quality does out in the end. And people want to have a good eating experience. They care about sustainability; they care about additives and preservatives and health. And that's why I think we are now set to prosper. Again it is up to Mark to decide which direction he wants to go in. But I think we are in a good place.

Yet you're losing market share.

Well we've stopped losing market share. And part of the reason we lost market share was we were the only retailer last year to have deflation. Since the market share is measured in pound terms, yes our market share did slip a bit. But actually we were the only retailer to have volume increases, and we're now moving forward. Market share has now stabilised. So I'm confident we can start growing again.

But some critics say that your business model in food is flawed and you can never compete with the supermarkets and that you should concentrate on clothing.

I fundamentally disagree. First of all we have got half our business in foods. Second that we've been in the food business for over 75 years. And thirdly our business is growing and customers want it. And I actually believe that this is now a good time for quality foods.

We occupy that space; at the top end of the market, there are very few other players in there. The top two players have only got 8 percent of that market. Customers do care about sustainability, they do care about health, they do care about additives, they care about preservatives, they care about animal husbandry, and they care about what they put in their bodies. And they've woken up to the fact that what you pay for is what you get. And at the end of the day, I think our business, with its innovation, with its commitment to quality, with its outstanding reputation is well, well placed to drive forward going forwards. So I don't agree with that at all.

And what about the rollout of branded products how's that going?

Yes, it's been successful. We made the right decision. It took us a while to make that decision. We did a trial some 18 months or so ago now. It's now in 200 plus stores and it's doing well. And those stores that have anniversaried over the previous year are in double digit growth. So I'm very pleased. And our customers tell me, and that's the way that I can judge whether it's right or wrong. First of all, nobody complains to them any more. Secondly lots of people tap me on the shoulder when I'm in stores and say, 'Thank goodness that you're doing that, because I can now buy my Kit-Kat or my Marmite or my Kellogg's cornflakes, and if that's what they want that's our job to provide them.

How has the international business been performing in the year?

It has actually had good growth. We're doing well. You have to take out the difficult trading that we have had in Ireland and in Greece. But in aggregate I'm pleased with the performance. We've continued to do what we said we would do, which is to drive into emerging territories. So, we've got a new partner in India; we've opened stores there. We're now making good progress in China; we'll open another store there in a very few weeks and a third this year. And we will get back to growth again I'm sure, in Ireland, in some of the more troubled economies as we go forward. But the strategy is in place. Again it is up to Mark to review that strategy. But I'm sure that international will be part of his strategy going forward.

Last year you painted a picture of much more to go for in terms of online sales, direct, a better supply chain. Is that all still part of the plan?

Well online has done very well, and we continue to out-perform the market. We're on track for our £500m in the year 1011. And again it is up to Mark to review how we want to continue to drive our multi-channel capability, but the customers want it, that's the important thing, and we are well set to take advantage of that. And that's a good place to be.

Underneath all this the business is heavily investing in IT and systems, as part of our 2020 programme. This is a project we started some two years ago. It's a project lasting two, three, four years, but this business will have some of the best systems behind the scenes to make sure that we can do everything customers want; move goods very quickly, move goods cheaply, make sure availability is right and make sure that we can get the right goods in the right place to the customers at the right time.

During the year you introduced 'Shop your Way. How's that going down with customers?

It's done terrifically well. It's actually exceeded my own expectations. The customers get it, and if the customers get it you know you're on the right track. It gives them full flexibility to have what they want, when they want it and we're extending it as fast as we can.

So, what's the potential then for M&S's multi-channel offer? How significant is it to future [inaudible]?

I think the potential is unlimited. I am very excited for this business. I am pretty proud frankly that this management team has delivered a business through the recession, which is heavily invested in. Some have criticised us and me for the level of investment, but I'm sure that will bear fruit in the years to come. We've got a new energetic Chief Executive who has got just the right experience to take the business forward. He'll be looking right across the business to see what the opportunities are, and I'm sure in time will deliver his views on the business. And I'm confident that the business has got the potential to grow going forward.

How is plan A going? You've revised your targets there, there were a little bit stretching.

Well they are even more stretching. Again, plan A is something which has caught the mood I think. This was something we set in place in 2007/8. We said that we would invest in the business to do the right things. Interesting enough it has now turned, if you like, profit positive. So it has allowed us to reinvest back in products and cheaper prices and give the customers better deals. But it shows what Al Gore says, that you can be a sustainable business and a profitable business. And as a result of that we've reset the targets to a higher bar and we've got a pretty ambitious target; which is to be the most sustainable retailer by 2015. And I see no reason why we can't achieve that ambition.

Why's that? Because it seems unrealisable really doesn't it?

Well I don't think so. First of all if you don't set a bar you'll never know if you're going to jump across it. We are, I think, ranked fourth in the world in terms of our ethical retail standards. And I don't see why we can't keep pushing ahead and even better and doing it. And it's something that the business can differentiate itself with. It's what customers want.

Put aside what's happened with the recession in the last year or two; long term companies need to be responsible. Long term companies need to play their role in the world and make sure we do our bit; whether it's on sustainability, whether it's on ethical trading, whether it's on fair trade, whether it's on living wage. We've got to do our bit and we're well place to do so. And I think our customers will respect us for doing so.

You've talked a little bit about Mark Boland. How are you working together and when are you going to hand over the day to day running of the business to Mark?

I sort of put it this way, I'm responsible for -- I'm allowed to adjust the price of apples and knickers, but I'm not allowed to buy any shops. So tactically I'm running the business for as long as he wants. Strategically he's now in charge. That's the way he wants to run it, because that was his choice to do that. When he's ready he'll tell me to stop adjusting the price of apples.

We're getting on very well, there's a good chemistry between us. And I've always said I'm at the disposal of the Board and with Mark, when he's finished with me I'll disappear.

And is this search for Ian Dyson's replacement underway?

The search for Ian's replacement is underway. The search for a Chairman is underway. You'll see white smoke on both of those at some point in time. But an active search is in place.

And what about your legacy? Have you achieved what you wanted to achieve when you first joined M&S as chief executive? Is there anything you would have done differently if you'd had your time again?

I don't like the word legacy, but I am very proud to have led this business. I think we've got a fantastic brand; I think we've got a fantastic team of people and a fantastic workforce who really do understand and believe what Marks & Spencer does. And, more importantly, I think our customers get it.

M&S is a widely loved business. We've heavily invested in this business for the last six years. We did have to deal with the recession. We are through the recession and I think what we've left behind is a business in a better place than it was when I came here in May 2004. Sure, I may have done some things wrong. If I had one regret, I wish I'd gone faster.

full transcript»

Cantos produces financial news videos daily. Watch interviews with leading FTSE 100 and 250 companies on the morning of announcement. It's free to view. Cantos - for the latest UK business news and stock market analysis.

To watch this video and gain access to our full archive you must be a registered user.
Not registered?
Registration is free and only takes a minute.
Click here
Already a user? Log in

By viewing the video or accessing the transcript you are agreeing to accept the Cantos terms and conditions.

Also on Cantos


  • 0:00 1st Jan,

  • 0:00 1st Jan,

  • 0:00 1st Jan,

  • 0:00 1st Jan,

  • 0:00 1st Jan,

Bookmark & share:

Email this url to a friend


http://www.cantos.com/

Sign up for our weekly newsletter

Sign up for our weekly newsletter detailing the latest programmes on Cantos. Simply send us your email address below and we'll do the rest.

We will not use your email address for any other purpose or pass it on to third parties. You can unsubscribe from the newsletter at any time.

Sign up for in-depth email alerts

Get the latest in-depth company news straight to you inbox. Simply send us your email address and we'll do the rest.

We will not use your email address for any other purpose or pass it on to third parties. You can unsubscribe from the newsletter at any time.

Not registered?

Please log in to view the full video. If you do not have an account, please consider registering. Registration is free and only takes a minute.

Register here