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Filter by: Remuneration | Shareholders | Employees | Board | Product and Stores | Topics raised by shareholders

Can you please explain why Stuart Rose, after being given a salary of £850,000, also received a signing on fee of £1.2m? Also could you explain Charles Wilson's signing on fee of £900,000, and how Mark McKeon received £699,000 for 9 months' work? For somebody who earns an average of £15,000 - £20,000 per year, that is 46 years' work.

A: Last May when Philip Green announced that he was contemplating making an offer for the Company, the Board had to respond to the declining business performance. Over a period of three days we recruited Stuart Rose, Charles Wilson and Steve Sharp. Marks & Spencer shares were trading at 260p - 270p before the offer. When arrangements were being made by Philip Green for an offer, the share price lifted to 360p, where it is today. That is testament to the confidence that the financial markets have in the future of the Company under the management of Stuart, Charles and Steve.

I share with you some discomfort about the 'rewards for failure' but we had to replace some senior management and we had contractual obligations to these individuals. They were old contracts which did not have mitigation clauses in them. When I became Chairman the Board were fully supportive of the introduction of a mitigation obligation to ensure that this does not happen in the future.

Q: The sales are down for the seventh consecutive quarter but the shares are up by 10p, why?

A: If you look at the top line sales number it is pretty dismal reading, but if you look a little further into the statement we released today, there is some good news. The first is that Food has begun to move forward - it was 3% down in the last quarter, it’s now nearly 1% up. That is a 4% turnaround.

If you look beneath the total decline of General Merchandise sales to the full price sales rate (rate of sales which have not been discounted) they are 2.4% down, this is the best performance the Company has had for three quarters.

Additionally our stock covers are very tight, the amount of stock going into the sale this year is 40% less than last year, which will deliver £100m of markdown savings this year.

What analysts will have been looking for is some comfort that the forecasts in the market will be met. To date I don’t believe there has been any change in analysts’ forecasts for the Company, so they will have taken this statement as good news.

Clearly, we would like to see the top line moving. The next two quarters are going to be very important to us. Let’s see what happens in the next six months

Closing shareholders funds, at 2 April 2005, were £521.4 million. For 2004 they were £2,454 million. How do you plan to increase shareholders’ funds in the future?

A: Shareholders’ funds decreased last year largely due to the return of £2.3 billion to shareholders. However, the accounts do not reflect the full value of the Group’s property portfolio, which was valued at £3.6 billion in July 2004. Had this valuation been incorporated into the Group’s balance sheet, then shareholders’ funds at 2 April 2005 would have been £1.8 billion.

Going forward, if profits come through in line with expectations, shareholders’ funds will also increase.

Why is Marks & Spencer holding the AGM outside of London? I don’t usually travel north of Watford.

A: (Another Shareholder present) It is with great regret we hear these comments, which have upset a number of those present. This is my first AGM I have attended as a shareholder. We have had an excellent meeting today and I am proud to have Marks & Spencer here in Birmingham.

A: (The Chairman) May I say on behalf of the Company we have been hugely welcomed by the community of Birmingham and particularly by the staff at The ICC. We look forward to returning next year.

Can you retain the AGM timing to the afternoon so shareholders can attend at reasonable cost?

A: Yes. As we moved the AGM to Birmingham this year we held the meeting at 2pm rather than 11am to enable shareholders to travel off-peak. We will do so again next year.

An Employment tribunal has recently found that at least some staff of the Company do or did have contracts of employment which failed to include all the information required by law and at least on one occasion has made a punitive award against the Company as a result of that failure. Would the Board explain how the situation occurred, what steps it proposes to take to prevent it happening in the future and what the likely costs will be to the Company of its failure to comply with the law in this respect?

A: I am not aware of any cases in which an employment tribunal has found that our contracts do not meet legal requirements. We are confident that our contracts fulfil legal requirements. Indeed shareholders would expect that to be the case.

In light of recent media comments, what percentage of the Company’s staff now belong to a trade union. What are the steps being taken either voluntarily or as a result of legal obligation to reorganise any or all of these unions and why does the Board believe that the sudden dramatic increase in union membership has occurred?

A: Marks & Spencer does not recognise trade unions within the UK and staff are under no obligation to tell us whether they have joined or not joined a trade union. I have no evidence that there has been a dramatic increase in trade union membership. We talk regularly with our Business Involvement Groups in Head Office and Stores and keep in very close touch with what is going on. I am not aware of any significant increase in trade union membership. It is up to our staff to tell us whether they want us to recognise a trade union and I don’t believe at the moment that they are telling us that is the case.

What is the benefit of changing the Chairman, there seems to be no upside from the point of view of the shareholder?

A. We have a very cohesive Board. Anybody who has the opportunity to witness one of our board meetings would describe them as open, honest and challenging.

The Board is united around a common purpose and we have been extremely fortunate in securing the services of Terry Burns, who will join our Board in October as Deputy Chairman and will succeed me 12 months from now. I wanted to have that extra period to ensure that we had the continuity and stability that I believe Stuart Rose and his colleagues need, as we head through this critical period of delivery. We are making good progress and I have every confidence that 12 months from now we will be able to report that we have made further progress.

Who is Lord Burns? What experience of retail does he have? Considering he holds five other positions (two chairmanships, three non executive positions) this will be his sixth position. When is he going to find time to devote to Marks & Spencer?

A: Terry Burns is an extraordinarily experienced person in public service and more recently in business. Before my colleagues offered him the position they established with him his availability and time commitment and he has assured us that he will be able to give sufficient time to the business. Indeed one of the reasons why he is not taking the Chairmanship for 12 months is to enable him to reduce his external commitments, allowing him to devote sufficient time to this task. I am convinced that Terry will give us the time that is necessary to perform the office of Chairman to a high standard.

Two years ago Abbey National lost £100m, presumably under the Chairmanship of Lord Burns. That Company was then sold to a Spanish Bank and rebranded Abbey. If he lost £100m two years ago, how is he going to be of any benefit to Marks & Spencer?

A: I don't think it is really appropriate for me to go into details. However I will say, the Board has made a decision that Terry Burns is the right person to take the Chair. He is also going to be Deputy Chairman at the beginning of October, and is going to spend a lot of time with us before he becomes Chairman. He will do well for you and he has my full support.

Do you have a specific programme to roll out stores internationally?

There is strong demand from both franchisees and others to develop our overseas business. Our brand overseas trades very well and made very good profits last year. However our first priority is to get our core business in the UK back on track before we embark on any further activity.

What is the Group's strategy with respect to the international business that is still M&S owned? In particular Kings Super Markets in the United States? Could you please indicate what plans you and the Board have for the future direction of Kings or do you regard a supermarket chain, however successful, as a non-core business?

A: Kings has performed well this year in a very difficult market in the United States as a result of actions taken in the previous year to improve performance. Kings continues to be an ongoing part of Marks & Spencer and there's no change to this at the present time.

Why doesn't Marks & Spencer open stores in airports?

A: Our chain of Simply Food stores is a very good concept and we're anxious to extend them wherever we can. We're already finding our Simply Food stores in railway stations are proving successful. Also, we've recently opened one at Heathrow Airport which has been well received. Conversely we're in the process of closing one at Manchester because it wasn't working. The success of these stores depends on a number of things, including getting the right size store and making sure it's got the right amount of customer traffic.

Should the emphasis for products be on quality and innovation rather than cheap prices?

A. I agree with you, which is why we don't sell a t-shirt for a few pounds, we sell it for £6. We always consider our quality standards as it's what our customers expect from us and it will always be our driving force.

We are also very particular about where we buy our goods from, making sure we source products that are of great quality and also adhere to our high ethical standards.We have not reduced quality on anything in the business knowingly since I've been here.

Why not eliminate viscose and focus on quality?

A: We continue to remain committed to quality and aim for customers to find something for them every time they visit - whether it's at the lower or mid-price range or something with a bit more luxury.

We offer garments that are made from materials that are durable and will perform, such as easy care fabrics and cashmere. Not all artificial fabrics are bad and some of the very finest fabrics, in terms of handle and comfort, are in fact man-made fibres.

We have too many stores trading too many hours - not just M&S but the high street in general. Does this mean we have to source cheaper goods abroad to fill our stores? Should more goods be sourced from British suppliers?

A: In terms of opening hours, there is no business benefit for leaving a store open for too long. In certain areas, such as shopping centres, we have to operate within certain guidelines, but overall we look at what our customer activity and views are.

Sadly, there is not a significant manufacturing industry for textiles in the UK and there hasn't been for a number of years. We took our clothing production abroad because people demand better value and that's where the manufacturing has migrated. However on Food, we remain committed to British farmers - more than 80% of our Food produced is sourced from the UK.

Q: You say that your core customers are 33 to 55 years old, but what about those older than 55?

A: Even though we are concentrating on 35 to 55 year olds, there is still a place for people that are older than that. In menswear we are currently introducing a good selection of classic shirts, blazers and trousers. We also reviewed our womenswear offer and relaunched our Classic Collection range at the end of last year and will extend it into casualwear later this year.

Sales staff seem to be unhappy with quite a lot of the product. The feeling is that they should be able to speak more frequently to senior management and the Board. I would like to ask Mr. Rose how often he goes into stores, not only to talk with customers, but also to discuss things with his sales staff.

A: That answer is pretty well every week and if it's not an official visit, I would certainly pop in on a Saturday just to have a look around. I'm very conscious of the need for us to do what we used to call in this business many years ago, probing. That is getting our senior management, not just myself, in stores and finding out from customers, and importantly from our store staff who have very valuable information, what the feedback is and making sure that we react to that. We do listen and we do talk and I think personally my track record is not bad.

I certainly do go out of London. We go all around the country including Scotland, Manchester or where we were in Birmingham yesterday. I'm pretty busy in the office at the moment, but do make the time whenever I can.

Are you doing anything to improve signage?

A: The answer is definitely yes. We did have a situation in our stores last year where we had too much signage and it was confusing so we started to declutter the stores. As part of our new programme we've got some very clear branding coming through and we've got new and exciting signage, which you can't miss, that will be going into some of our stores very soon.

I feel that you are not looking after your older, previously loyal customers enough. For example I used to buy most of my shoes from M&S but can't find any to fit my requirements. I have also looked for dresses and I have not really found anything suitable for the mature lady.

A: As it happens, our Classic Collection, the range that we introduced with specific focus on the more mature lady who wanted fashion, has been very successfully received. So either we haven't got it in enough stores yet or we're not doing enough to please everybody so we'll see what we can do.

I'd like to ask about the window displays. Having visited more than 100 branches in the last 12 months and having worked seven weeks on the Food section at Nottingham, I'm absolutely appalled at the standards of the windows.

A: It's a concern we share with you. We are not using our windows to the best advantage - our most obvious advertising space. They are the eyes into the store from the customer's point of view and we must make better use of them. Steve Sharp, our marketing director, is working hard on improving them. Actually, I think we've made some significant improvements over the last three months and you are absolutely right, we need to get better.

How can we prevent trolleys going missing from stores?

A: We take this as a serious issue, as trolleys are expensive and not good for the local environment if abandoned or not returned to stores

Isn't newspaper advertising ineffective and expensive - could the money not have been better spent?

A: Our advertising in all media is a part of our brand strategy with strong messages to our customers about our products and values. The results have been very encouraging in terms of sales and how our customers perceive Marks & Spencer and we will continue with this approach.

Can we improve service levels in stores?

A: Any lack of service is unacceptable. We have reiterated to our staff the importance of making sure the customer comes first. We have just introduced one of the biggest training programmes on the high street. Over the coming months all of our store staff will take part in a special one day customer service training programme. We have a fantastic team of store assistants and managers across the country and their job is to look after our customers.

What about our land and property?

A: We have undertaken a review of our property and stores in Marks & Spencer across the UK. There are still some opportunities for us to fill gaps, for example in retail parks. And in Birmingham you will see a refurbished main store and new stores at the Fort in Birmingham and the Coventry Arena.

Since most of your customers are women and women's clothing is the biggest issue, how are their views represented on the Board.

A: With the recent senior management changes we have no women directors on our Board. However, women are well represented at senior levels below this. With the appointment of Lord Burns as Deputy Chairman, the Board can now work on completing the task of broadening the diversity and skills present around the table.

There are too few cash tills in the stores - you often have to search to find one and inevitably have to queue. There are not enough staff serving.

A: We know that we have to improve service to our customers and are introducing one of the biggest training programmes on the high street. Over the coming months all of our store staff will take part in a special one day customer service training programme. We have also improved staff scheduling to ensure that more customer assistants are on the shop floor at busiest times

Middle income, middle aged and middle of the road are the sorts of people who shop in M&S not young people. How are you meeting their needs?

A: We have been listening more closely to our customers and we're working hard to give them what they want. For example, we have listened to our customers who said that our Classic ranges were dull and not stylish enough. We have introduced new fabrics and better styling into the new ranges launched just before Christmas. These have been well received and our share of the 55-plus market is increasing. We are continuing to strengthen this offer and will be launching a Classic casualwear range this Autumn.

Continual re-arrangement of location of Food causes frustration to customers and diverts staff from other duties to locate goods.

A: We are working hard to improve our store environment and make our stores easier to shop, but at different times of the year we do need to rearrange our Food hall according to which products are most in demand at the time. In recent years our Food business had become over-complicated with too many sub-brands and product proliferation. We cut 500 lines so that we could concentrate on our core strengths of quality and real innovation.

We are delivering a step change in our customers' shopping experience by creating stores with a great environment, great product and service that exceeds expectation through our store remodel rollout programme. This will include Food halls that are modern, exciting and distanced from competitors with new flooring, fridges and presentation techniques.

We hope that you start to see the improvements in your local store.

M&S appoint the same auditors year after year. As a national and valued institution perhaps the Company can lead the way in periodically changing its auditors?

A: PricewaterhouseCoopers LLP has audited the Company for a number of years. The UK Government considered and subsequently rejected the introduction of a requirement for audit firm rotation. There is evidence to suggest that audit effectiveness suffers in the early years of an audit appointment due to the audit team's lack of familiarity with the business.

However, the lead audit partner has been in place for two years and PwC periodically reviews the tenure of senior management within the audit team to ensure that no perceived threats to independence arise.

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