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Filter by: Board | Shareholders | Customers | Employees | Plan A

Why does Stuart Rose think he is exempt from the Higgs Guidance 2003 on Corporate Governance, with his move to become Chairman and CEO?

A. The Higgs Guidance recommended that the CEO shouldn’t become Chairman, however it also established the principle of ‘Comply or explain’.

The decision to combine the role of CEO and Chairman and thereby elevate Stuart from CEO to Executive Chairman was done absolutely in the best interests of the Company and, in line with the Higgs Guidance, we explained our departure from the guidance.

Balancing controls have been put in place to mitigate governance concerns; Limited period of appointment in combined role until 2011; the appointment of a Deputy Chairman; increased responsibility for other executive directors and the Executive Committee; and the future recruitment of additional non-executive directors.

What is M&S doing to improve its succession planning?

A. Succession and continuity of leadership is a priority, especially as we move towards 2011. We have a strong senior team in place which has an opportunity to develop its skills – including a strengthened Board and an expanded Executive Committee. With Ian Dyson taking on significant new responsibilities Stuart can now focus on a more specific set of executive responsibilities, in particular developing and maturing talent within the business.

Would the members of the Board tell us here, in front of this congregation of the owners of the Company, whether they are fully supportive of the decision to combine in Sir Stuart Rose the offices of Chairman and CEO?

A. The Board entirely and unanimously supported this move for a number of good reasons. We believe that it is in the best interests of M&S to retain Stuart in a leadership role through to 2011. It is also worth mentioning that, in these somewhat uncertain economic times, continuity becomes more important. Stuart now has a specific set of executive responsibilities, in particular product and the key growth of M&S direct, and international. He is also particularly responsible for developing and maturing the good talent we have within M&S, many of whom were given additional responsibilities concurrent with the new structure. In particular, Ian Dyson has also taken on significant new responsibilities with the running of our retail and HR operation.

The decision to retain Stuart was made after careful deliberation, and has had widespread support internally and externally. There has been much comment, and some criticism, over the combined role of CEO and Chairman. While we are naturally sensitive to these critics, I repeat, that I and the Board were entirely convinced that the route we chose was the right one for your Company.

The Board has put into place a number of safeguards to ensure the continuance of good governance in your Company, and to act as an independent balance in the new structure. Included in those safeguards is my appointment as independent Deputy Chairman, a role I take very seriously, and a role which will take up at least half my working week. My primary responsibility is to head up the nomination committee, whose job will be, at a point in the future, to choose Stuart’s successor, as well as the senior executive team who will run this business.

Ladies and gentlemen, M&S has always had an excellent record in corporate governance. It is your Board’s intention to ensure that this continues.

I consider that the Remuneration Committee has no transparency and that they can effectively vote on their own salaries. Would the Board like to comment?

A. The Remuneration Committee is made up entirely of highly skilled and independent non-executive directors. The Committee reviews the pay and benefits for the executive directors on behalf of the Board. They do not have any influence over their own fees, which are in turn determined by the Chairman and the executive directors.

The Remuneration report as published is open and transparent and complies with the relevant guidelines and codes of practice and is available for all shareholders to review.

Can the Board give full disclosure on the circumstances surrounding the departure of Steven Esom?

A. We are facing challenging market conditions in Food and needed to tackle these by increasing the pace of change on operating and trading initiatives. As a result we had to take action and Steven Esom stepped down from the Board and left the Company. It would be inappropriate to further comment on Steven’s departure while we are finalising details with him. However, the Board wishes Steven well for the future.

Why don’t M&S Directors set an example to the external market by being awarded sensible and reasonable salaries and bonuses?

A. The M&S directors’ salaries and bonus are set by the non-executive members of the Remuneration Committee. This is carried out by reviewing relevant benchmark information in other FTSE 100 companies and awarding salary increases and bonus levels accordingly.

The executive directors did not earn a bonus in the financial year to March 2008, despite hitting over £1billion profit. This shows that stretching internal targets are set and payments only awarded where these are achieved.

Was Steven Esom sacked because of a decline in the Food business which has coincided with introduction of plastic bag charging? Do the Directors support a charity, and if so shouldn’t they be donating to charity from their own income, rather than charging customers for it?

A. Steven Esom’s departure, which was very regrettable, was not related to the plastic bag charging scheme, but rather to some of the issues in the business. Steven did some good work for us but we need to pick up the pace of change.

Although Board members do donate personal funds to charities, our carrier bag charging scheme helps us to achieve two things. Firstly, by working with our customers in this way we will cut the number of food bags used by 70% - over 280 million bags a year. The scheme also sees profits donated to environmental charity Groundwork so they can create or improve ‘greener living spaces’ such as parks, play areas and gardens in neighbourhoods across the UK.

We have already raised £120,000 for Groundwork, and expect to improve around 40 neighbourhoods throughout the UK in the next year.

Can you please comment on the coverage in the Daily Telegraph on 9 July 2008 by Jeff Randall?

A. 1. He talked about the £3bn value of the business today versus the £9bn value. A year ago our share price was 640p which means today it is down 60%. But if you look at other retailers, Next is down 60%, Debenhams down over 70% so this is not just about M&S – clearly the whole sector has suffered from the uncertainty over consumer spending and the economy.

2. He comments on the cost of the buy-back programme. We’ve bought back 8% of our shares, and returned over £900m to shareholders through dividend and buy-back in the last year. We need to be sensitive to market conditions, our trading performance and our desire to continue to invest in the business – the buy-back needs to be considered in the context of this.

3. Responding to his comment on bonds trading… technically the bonds are being priced below face value. But we are not alone. Financial markets and the economy means the majority of bonds including Tesco’s recent dollar issue are being priced below face value. Few of our bonds are currently changing hands and investors are holding. The fact that we were able to issue 30 year debt in difficult market conditions last December, demonstrates investor confidence in the long term prospects of the group and that we will be around in 30 years time to pay them back.

4. On the subject of debt, this was a deliberate strategy to reposition the balance sheet and make it more efficient – we were over-capitalised back in 2004. The increase in debt reflects the buy-back and investment we have made in the business. Both of these will drive returns and value to shareholders over the long term.

5. He questioned the store refurbishment programme. We had to deal with years of underinvestment in our stores. But we absolutely believe the store modernisation programme was right to do and today we have shops we can all be proud of. We are happy with the returns and our customers tell us they like them too. Having the right store environment is absolutely necessary to be competitive on the high street – the competition will not stand still and is all now investing in their stores too.

6. In terms of negative cash flow, we are a highly cash generative business with plenty of bank facilities in place to support our liquidity and have the flexibility to manage our cash flow over the coming months.

7. On our property portfolio, in 2004 our properties were worth £3.4bn and we have expanded and invested in our estate since. Our property is not pledged to the pension fund and remains under the control of M&S. Our asset base is absolutely not “under water”. Our net assets at the year end were £2bn.

8. Regarding his comparison of Sir Stuart Rose to Gordon Brown… we do not comment on party politics.

9. In relation to our branded goods trial… this is a small trial. M&S will never be a destination shop – but the branded goods trial is about convenience. If our customers don’t want it, they won’t buy it and we’ll review the situation.

10. On the questions of whether Sir Stuart will resign if profits go below £748m… we’re only one quarter into our year, we can’t give a profit forecast.

I refer you to page 35 of the Annual Report, which lists our three principal shareholders. I’m enquiring why Brandes Investment Partners shareholding is so out of date. Also do we have any knowledge of short selling of Marks & Spencer Shares? Is there significant short selling?

A. In accordance with the Financial Services Authority’s (FSA) Disclosure and Transparency Rules (DTRs), shareholders are required to notify the Company of significant voting rights in our shares. The dates shown in the Report and Accounts are the dates at which these shareholders notified the Company in line with their obligation under DTR 5. They have not been required to make a disclosure since the dates shown.

The FSA recently introduced a disclosure regime for significant short positions in companies undertaking rights issues. These provisions were introduced into the FSA's Code of Market Conduct and came into effect on Friday 20 June 2008.

The disclosure regime states that any short position of greater than 0.25% in stocks admitted to trading on prescribed markets and where the company is undertaking a Rights Issue, must be disclosed by means of an announcement to the London Stock Exchange. There is no need to make a further disclosure if the short position increases, nor is there an obligation to disclose if the short position falls below the 0.25% threshold. The holder may choose to disclose if its short position falls below the 0.25% threshold, however it will be required to make a further disclosure should it subsequently increase its position to 0.25% or above. These regulations to which you refer only apply to companies undergoing a Rights Issue which, Marks & Spencer is not.

Will you be able to maintain the same level dividend next year?

A. Our philosophy is to have a progressive dividend policy. There is no current prospect of a dividend cut. The decision on dividend is always taken by the Board at the end of the trading period in light of the performance of the business and the conditions prevailing at that time. May I remind you of our starting point which is a very strong balance sheet and cash flows.

Why don't you mention debt of the company in the index of the annual report and what is the debt?

A. The measure of debt used is net debt. At the year end net debt was £3.1bn. This is disclosed on page 90 of the annual report and is referenced in the index.

Will the remainder of the share buyback be completed?

A. We are operating, and aim to operate, an efficient balance sheet, with the correct balance of debt and equity. The decision to buyback up to 10% of the share capital was to improve our balance sheet efficiency. We've bought back 8% of our shares, and returned over £900 million to shareholders through dividend and buyback. As mentioned earlier, we need to be sensitive to market conditions, our trading performance and our desire to continue to invest in the business - the buyback needs to be considered in the context of this. We are running the business for the long-term.

To what extent is M&S able to control/direct/influence the quality of customer service at M&S Money? Since its sale to HSBC, there is no comparison in the service, to the extent that I avoid any contact with them unless essential.

A. I am very sorry you have been disappointed with the service. As you say, we sold the business to HSBC in 2004, although we have a management contract and a profit-share arrangement with them. We have some vigorous monitors on customer service. We track it all the time. I get access to that information with my team. There have been improvements in some areas so I am doubly disappointed you have found it bad. Let us meet after the meeting and look at the specifics. I would love to take it up with them.

Has the Company considered loading the &More monetary and bonus points onto the card itself, rather than issuing paper vouchers which can become out of date or lost?

A. Thank you very much for this excellent idea which we will definitely be considering further.

I have inherited shares (I am a fifth generation share holder!). Over the last few years I have been unable to find the sizing and styles for a younger person. Particularly, bras – the fabric has changed on my favourite bra. Trouser lengths and large sizes of footwear are unavailable. I have been unable to buy any clothing, which is disappointing as a shareholder. Classics styles are too old fashioned, even for older customers! Food is generally excellent but pricey.

A. We do have 12% of the womenswear market in the UK and we do have 21 million customers who come into our stores. We have worked hard to interpret the season’s key trends for all age groups. We have segmented our sub-brands to assist customers in finding ranges. Our Autograph and Limited Collection together with Per Una offer great choice for our younger customer.

We have taken steps to improve availability; this includes investment in technology to get a more accurate picture of where our product is in stores.

Both Stuart and Kate offered to take Ms Saul shopping in one of our stores to show that we do have the choice that the customer is looking for.

In terms of food pricing M&S has always stood for value, which is a function of price times quality. The food we sell is of the finest quality in the high street. We do charge a premium. We are acutely aware that our customers’ pockets are a bit stretched, we are looking to see what we can do, however we will not reduce our quality.

Where can I find a cotton dress, specifically with sleeves, a reasonably high neck line and a longer hem-line, suitable for “golden oldies”?

A. We do have a very extensive range of dresses this summer. We have grown our market share considerably in this area. We do have cotton, linen and silks but we still have not delivered on longer sleeves. We will ensure that we do extend our range and give you more cotton and more sleeves.

Are you listening - I don't think so. Last year I commented about the shoes not fitting and was promised a phone call from your shoe buyer - I am still waiting. I have been involved in the shoe trade so I think I know something about it.

A. Firstly we must apologise for not contacting you. Marks & Spencer is one of the largest retailers of footwear in the country. Every style we sell is fit approved by an M&S Technologist on an experienced fit model. We have previously undertaken research in conjunction with SATRA, a leading organisation in footwear research and testing, to develop the specifications of the typical M&S customer's foot. The dimensions of all our fit models fall within this specification and are constantly measured to ensure no deviation from this specification. This process ensures the fit of our shoes is correct and consistent.

To enhance the fit offer the vast majority of our range is made in both full and half sizes and we offer a wide range of wider fitting shoes for customers with a fuller foot. We have dedicated fit Technologists working with our suppliers and buyers. We continue to work very hard to offer consistent sizes in a range of styles.

We always listen to customer feedback on our footwear range and would of course welcome your views. A member of our womenswear team will be very happy to hear your views.

Why is the sale of ‘near waste’ food to customers is not consistently applied?

A. We introduced selling ‘near waste’ to customers in March this year, whilst there are obvious cost benefits, there are also significant reductions in sending waste to landfill as part of our Plan A commitment. The store policy for dealing with ‘near waste’ was piloted and trialled prior to full rollout and we believe is fit for purpose. There is an element of managers' discretion in the volume sold in relation to store turnover. We know there is variation in how much we recover and we have plans in place through the new retail structure to drive this in a more consistent way.

Why does M&S not sell tinned prunes & evaporated milk? It is a staple for the elderly.

A. We have a wide selection of food products which we believe offer a good choice to all age groups. We have also extended our range of groceries significantly with the introduction of ingredients; this includes dried fruits, nuts and seeds. We constantly monitor our product ranges according to customer shopping patterns and will continue to research options for all ages this year.

Can you please start to sell basic food items at the correct price and don’t use special offers e.g. 3 for 2 offers?

A. We are constantly looking at our food prices as well as the types of deals that we offer. We really do recognise that basic single food items need to be competitively priced. We have recently reviewed this and as a result have focused on 175 key value lines. This is the start of a programme to improve our values on basic lines, however we will continue to run specific offers alongside to remain competitive.

What is happening to close the loophole on credit vouchers on sale on eBay?

A. We issue thousands of credit receipts every year. Only a tiny percentage of them are sold on the internet and store managers will refuse to accept credit receipts if they have any suspicions about their origins.

We do not stand for any form of fraud or theft and take steps to work with the police to prosecute wherever possible.

Like other retailers, we are working with the British Retail Consortium and The Fashion Forum to raise issues around the sale of illegally obtained credit vouchers.

Why aren’t there any M&S stores in Israel, although there are some in Emirates?

A. Our franchise partners are always looking at potential opportunities in countries around the world (we already have 280+ stores in 39 territories) but this does not signify that we will open stores in all these territories.

We have no current plans to enter Israel.

In the light of the expected Green Paper on equality, what plans do you have? Also have you been to the Croydon store?

A. It is important to us that we have a workforce which reflects the communities in which we operate and we are proud of the diversity of our workforce. On the forthcoming Equality Act, we welcome changes which streamline and simplify legislation in this area, and we look forward to seeing the final detail of the Act in the next Parliamentary session.


I have visited the Croydon store - most recently in December 2007.

M&S is a member of Ethical Trading Initiative and presumably supports living wage for workers. I am a representative of workers in India producing clothing for M&S. Food costs all over the world have gone up including in India. 70% of wages go into basic food items. I have seen the utter poverty of workers manufacturing for M&S in India. They are not paid enough for a proper meal. M&S profits are going up and M&S is prospering. Why can't it pay workers in India enough to have a basic proper meal?

A. We have been members of the Ethical Trading Initiative (ETI) since 1999. Being a member of the ETI together with our own Global Sourcing Principles means that we require all our suppliers no matter where in the world they operate, to pay at least the legal minimum wage.

Around 85% of workers in factories which supply M&S in Bangalore and Delhi are paid above legal minimum wages, more than a nurse and the same as a Government employed junior doctor in India. They also receive other benefits including; free medical cover, crèche facilities and subsidised meals.

Can shareholders influence the allocation of charitable funds? I feel that some of the larger/national charities benefit over smaller charities. Small charities should also be considered for example the carrier bag profit.

A. We are committed to investing at least 1% of pre-tax profits into community projects every year. This builds on a heritage which goes back over 100 years.

We work with a number of main partners who support the aims of our business, for example, Breakthrough Breast Cancer, Shelter and Groundwork, as part of our carrier bag charging and donation scheme.

For our carrier bag reduction programme we chose an environmental project which could make a difference to communities across the country. Groundwork will use the funding for parks, play areas and green spaces. So far we have raised £140,000.

Our stores also have budgets to support smaller local charities.

Waste - both food and packaging. What is the M&S policy on this?

A. We work hard to reduce waste of all types. Under Plan A we have set targets to send no waste to landfill and reduce packaging by 25%. We reduce in-store waste by discounting food at the end of its display life, selling to employees and donating to charity. We are also working with the Government’s ‘Love Food, Hate Waste’ campaign to help customers reduce food waste as well.

Most clothing and home goods are not made in the UK. Many developing countries are now increasing demands on energy resources. Might this not be payback time for the West getting its goods so cheaply? Perhaps this might be the time to review the benefit of British manufactured goods? Your opinion please.

A. We buy over 80% of our food products (and over 50% of or food raw materials) from the UK and the Republic of Ireland. Our clothing supply base moved overseas in the 1990s because of lower costs of production – in order to keep M&S products competitively priced. This is still the case with recent sharp increases in energy costs being the same across the world.

Can I suggest a change to the carrier bags - follow the example of the U.S, by putting a flat bottom in it to make it more useful!

A. We review the sizes and designs of our carrier bags regularly to ensure that they are suitable for the wide range of different products we sell.

Flat bottomed bags are more complex and expensive to manufacture. Our cake bags, available from our food sections have a flat bottom to accommodate large boxed food items.

In the last 12 months we re-designed most of our main clothing, home and food carrier bags and are now made from 100% recycled material. This design was considered the most practical bag for most types of product. We will continue to monitor the bags.

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