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52 weeks ended

31 Mar 18

1 Apr 17

Change %

Group revenue




Profit before tax & adjusting items1




Free cashflow before adjusting items




Adjusting items1,2




Profit before tax




Profit after tax




Basic earnings per share before adjusting items1




Basic earnings per share




Net debt




Ordinary dividend per share




1Adjusted results are consistent with how business performance is measured internally. 2Refer to adjusting items table below for further details.  See glossary for definitions. 

Steve Rowe, Marks & Spencer CEO said: 
“At our half year results in November I outlined the need for accelerated change at M&S. The first phase of our transformation plan, restoring the basics, is now well under way and the actions taken have increased the velocity of change running through our business. These changes come with short term costs which are reflected in today’s results.

“There are a number of structural issues to address and we are taking steps towards fixing these. The new organisation will largely be in place by July and the team is now tackling transforming our culture to make M&S a faster, lower cost, more commercial, more digital business. This is vital as we start to leverage the strength of the M&S brand and values across a family of businesses to deliver sustainable, profitable growth in three to five years.”

Financial Summary 

  • Profit before tax & adjusting items down 5.4% impacted by the decrease in Food gross margin. 
  • Significant adjusting items of £514.1m including £321.1m for our UK store estate closure programme. Cash costs of transformation remain in line with plan.
  • Strong cash generation even after restructuring costs reduced net debt by £107.2m, enabling the maintenance of a full year dividend, unchanged at 18.7p.
  • Clothing & Home gross margin up 50 basis points with full price sales level. Revenue down 1.4% due to planned removal of two clearance sales, and unseasonal second half trading conditions.
  • Food revenue growth of 3.9% driven by new stores. Gross margin down 140bps, as we continued to absorb input cost inflation.
  • UK costs up 1.8% due to costs of new space, inflation and channel shift offset by efficiencies and lower incentive costs.
  • International profit before adjusting items more than doubled to £135.2m, as a result of the successful exit of loss-making owned markets and favourable currency effects.


Facing Facts
At our half year results we set out a hard-headed diagnosis of the headwinds faced by M&S and the change which is needed. The continued migration of clothing and home online, the development of global competition, the growth of home delivery in food and the march of the discounters all amount to threats to our business and market position. These, together with a challenging UK consumer market, mean that we have to modernise our business to ensure we are competitive and reignite our culture.  Accelerated change is the only option.

Developments in the retail industry since then have reinforced our conviction about the need for the transformation of M&S. Changes in the high street and migration online mean that we have to be decisive with our store estate, renewing and closing stores more quickly. Our supply chains in both Clothing & Home and in Food require significant upgrades, so that we can be faster to market, reduce high stock levels in Clothing, and improve availability and waste in Food. 

Although our online sales are growing, our online capability is behind the best of our competitors and our website is too slow. Our fulfilment centre at Castle Donington has struggled to cope with peak demand and some of our systems are dated. In both businesses we need to revitalise our ranges and reassert our reputation for value for money.

Restoring the basics
The first phase of our transformation is about restoring the basics, getting the architecture and infrastructure of the business fit for the future. This programme is now underway and gathering pace. 

We have made a rapid start with the enabling steps to deliver our ambition of reducing costs by at least £350m and provide a platform for growth in later phases of our plan as we improve our  ways of working and reduce unnecessary waste.

We have accelerated our store estate programme and are on the way to closing some 25% of our legacy Clothing & Home space. The success of this programme will be supported by sales transfer rates which have been higher than expectations and by the growth of online.

The website is being improved and we are investing to increase and improve e-commerce capacity, including at our Castle Donington site in order to support our ambition to double the online share of our Clothing & Home sales to over 33%. We are also building a new retail distribution centre at Welham Green. Teams have been established to address the supply chain issues in both main businesses, to deliver a faster, lower cost network.

We have established a long-term technology partnership with TCS to improve our technology base and we are migrating off legacy systems and an old mainframe.

Delivering shareholder value
The purpose of the transformation plan is to restore the business to sustainable, profitable growth.  In doing so, the board remains committed to maintaining the right balance between investment in the business, dividends for shareholders and balance sheet strength.  Given the continued net cash generation by the business and our strong belief in the potential of the transformation, we intend to maintain the dividend at its current level.


Building a faster, lower cost, more commercial M&S
It is imperative that we simplify our culture – as this is the only way to drive change right through our business. We need to change our organisation, move on from the structure of a single business led by functional directors. This created a top-heavy business that was inward looking and too “corporate”. 

We are moving to a family of accountable businesses each led by its own integrated management team. We start with our Food and Clothing & Home businesses, which are now very different in shape, each with their own leadership teams and support functions. Jill McDonald has already started to rebuild a top calibre team in Clothing & Home and Stuart Machin joined to lead the Food business in April.  We have restructured our marketing teams, appointing directors for both Clothing & Home and Food.

Looking forward, our property assets need proactive management and Sacha Berendji will lead the development of an active property management team alongside his other responsibilities. 

All of our businesses sit under the M&S brand and are united by a common set of values, trading style, shared infrastructure and draw on the same customer data.  Our focus remains to be an own brand retailer with quality, innovation, traceability and trusted value at our core.  At the centre we are building a streamlined corporate team including a very strong data analytics and customer insight function.  In addition, we look forward to welcoming Humphrey Singer as our new CFO in July.

Restoring broader customer appeal
In both businesses our customer base has narrowed and we have lost share of younger family-age customers and larger households. However, we retain leading market shares in key categories and occasions across all age groups. These are joining moments that attract new customers to our brand and present a real opportunity to restore popular appeal and grow our business.  

We are taking steps to recover our appeal to family-age customers in Clothing & Home, reducing the number of lines and phases, buying more stylish product in greater depth and emphasising value.  In 2017/18 we grew customers for the first time in five years.

In Food we are embarking on a programme to refresh the offer with relevant innovation, improved value for money, and a refocusing on more popular family product.  This will better exploit our unique credentials for freshness, taste, and traceability.  Meanwhile we are slowing our new store opening programme while we review the format for the future.

Our International business has already been rationalised and we are now building a much more competitive network of mainly franchise led businesses in territories where we believe we can grow.

We are in the first phase of our transformation plan, restoring the basics to enable sustainable profitable growth in future years.  It is our ambition to restore both Food and Clothing & Home to like-for-like growth and to build a much more competitive International proposition.  As we remove legacy and structural costs such as those in our store estate and supply chain, this should enable a reduction in costs and working capital.   

Full year guidance 2018/19

  • In Clothing & Home we expect a year end space reduction of c.5%, as we accelerate our programme to close less productive stores. We anticipate gross margin to be level to up 50 bps, with the first half of the year adversely affected by currency and sale timing. 
  • In Food, we expect year end space to be broadly level, as we open new Simply Food stores, but close less productive Full Line space.  We anticipate gross margin to decrease by between 0 and 50 bps, with the combination of price investment and the annualisation of input cost inflation in the first half of the year.
  • We expect UK costs to decrease by up to 1%, as a result of cost efficiencies and lower depreciation offsetting the costs of new space, channel shift and inflation. 
  • The effective tax rate on profit before tax and adjusting items is expected to be around 22%.
  • Capital expenditure is expected to be c.£350-400m.

Group revenue: constant currency
Q4 group revenue declined by 2.1% at constant currency. Revenue was negatively impacted by unseasonal weather conditions which we estimate at c.1% in Food and c.2% in Clothing & Home.  Conversely revenue benefited from Easter timing by an estimated c1.7% in Food and c.0.3% in Clothing & Home.  International revenue reflects the closure of stores in loss-making owned markets and the sale of our retail operations in Hong Kong to a franchise partner at the end of December.

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We will report our first half results on 7 November 2018.

Download full press release

For further information, please contact: 
Investor Relations:

Fraser Ramzan: +44 (0)20 3884 7080

Media enquiries:
Corporate Press Office: +44 (0)20 8718 1919

Investor & Analyst webcast: 
Investor and analyst presentation will be held at 9am on 23 May 2018. This presentation can be viewed live on the Marks and Spencer Group plc website. 

Fixed Income Investor Conference Call:
This will be hosted by Scilla Grimble, Interim Chief Finance Officer, at 2pm on 23 May 2018:

Dial in number: +44 (0)330 336 9411 Access code: 5847983

A recording of this call will be available until 5pm on 30 May 2018:
Dial in number: +44 (0)207 660 0134              Access code: 5847983