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M&S Reporting
Plan A 2020
Read our annual report at
marksandspencer.com/plana
planareport.marksandspencer.com annualreport.marksandspencer.com

M&S online
marksandspencer.com

M&S OVERVIEW
About M&S Marks & Spencer is a global,
multi-channel retailer of mainly own brand
high-quality, great value food, clothing and
home products. There are 1,382 M&S stores
worldwide and we employ 82,900 people.
Our values are: Inspiration, Innovation,
Integrity and In Touch.
Marks & Spencer is listed on the London
Stock Exchange and our principal trade
associations are Eurocommerce,
Confederation of British Industry and
the British Retail Consortium. We are also
a member of the World Economic Forum
and the Consumer Goods Forum.

EMPLOYEES WORLDWIDE

GROUP REVENUE

10.4bn

+0.8%

82,900 78%

ENGAGEMENT SCORE

UNDERLYING GROUP PROFIT BEFORE TAX

684.1m

NUMBER OF SUPPLIERS GLOBALLY

+3.5%

2,200

GROUP PROFIT BEFORE TAX

483.3m

-19.5%

CO2 EMISSIONS NET

GROSS

566,000 29
TONNES -4%

PER 1,000 SQ FT
TONNES -3%

TONNES

OUR SUSTAINABLE VALUE CREATION MODEL

PLAN A 2020

OUR RESOURCES
& RELATIONSHIPS

OUR RESOURCES
& RELATIONSHIPS

FINANCIAL
LI S

Generating returns for

our stakeholders through
effective management of
our nancial resources

PLAN A

AG
E

INSPIRATION

CORE
PURPOSE

INNOVATION
Aim to improve
things for the
better

OUR STAKEHOLDERS
Building and nurturing relationships
with our customers and suppliers,
and in the communities in which
we operate

NG

SIG

MAKING EVERY
MOMENT
SPECIAL

N ING

SERVE

L AN

&E

&P

IN TOUCH
Listen actively
and act
thoughtfully

DE

INTEGRITY

AN

SE

&

&

Strive to do
the right thing

D
L

Strengthening our brand through

creation and protection of our
intellectual properties

Aim to excite and

inspire our customers

BR

OUR INTELLECTUAL
CAPITAL

ST

Developing our employees

and their knowledge
GY

Maintaining our channels

and supply chain infrastructure
to meet customer demand

OUR PEOPLE

& R E S PO N D

E
AT

OUR PRODUCTS
& CHANNELS

TE N

PLAN A

SO UR

DE

L
VE

CE & BU Y

THE M&S DIFFERENCE

See more about our Value Creation Model in our 2016 Annual Report
Front cover image
Spark Something Good community projects will each
help 24 charities in 24 cities over 24 months.

NATURAL RESOURCES
Sourcing responsibly
and using natural
resources efficiently

01
PLAN A REPORT 2016

CHIEF EXECUTIVES INTRODUCTION

PUTTING CUSTOMERS
AT THE HEART OF PLAN A

Plan A will continue to underpin how we do

business at M&S. Our challenge is to make it
more accessible to our customers.
OVERVIEW

STEVE ROWE CHIEF EXECUTIVE OFFICER

10 Performance summary
12 Economic 15 Environmental
23 Social 29 Supply chain

STEVE ROWE CHIEF EXECUTIVE OFFICER

06

PERFORMANCE

GOVERNANCE

34 Governance
35 Plan A Committees
38 Assurance statement
40 Stakeholder relationships
41 Commentary from Jonathan Porritt
41 Sustainable Retail Advisory Board
42 GRI index
43 UN Global Compact
44 Independent recognition

07

MARKS AND SPENCER GROUP PLC

STRATEGIC REPORT

ANNUAL REPORT AND FINANCIAL STATEMENTS 2016

OUR BUSINESS

CHIEF EXECUTIVES
VES
STRATEGIC UPDATE
ATE
We are at our best when we are completely focused
ocused
on our customers. My plan is to keep things
ngs
simple by putting them at the heart of M&S
&S
every decision starts with them.

OVERVIEW

Ive worked in every part of M&S, from the

shop oor to leading Retail and M&S.com,
from Menswear merchandising to running
our Food division and my most recent
position as Executive Director of Clothing
& Home. I care passionately about the
company and its success.
Before I talk about the future, let me
address our immediate past. Our
performance over the last year was mixed.
Whilst we continued our great performance
in Food, the performance of our Clothing
& Home business continued to be
unsatisfactory. Our International business
also had a challenging year and was
affected by numerous issues, both internal
and external. Overall Group prot was
impacted by a number of non-underlying
items, which this year include impairments
in our International business, our UK store
portfolio and a review of our Clothing &
Home buying and merchandising system.
There are further details on these in the
Financial Review on page 24.
I want M&S to play a leading role in the
future of UK and international retailing,
and I want it to have a clear and sustainable
path. When my appointment was

announced in January, I immediately

set about gaining a deeper understanding
of why parts of the business have been
underperforming. I asked myself and the
team a series of exam questions about M&S.
How can we understand our customers
better? Is our current structure right for
the companys future? What are the growth
opportunities in Food? How do we recover
and grow our Clothing business? What do
we need to do to respond to the rapidly
changing consumer environment, both in
the UK and internationally?
Answering some of these questions and
tackling the issues will take time. But others
are more easily answered. We have set
out the rst phase of our plan: we
addressed how we can better understand
our customers and what M&S means to
them; we outlined our immediate plans to
address recovery and growth in Clothing
& Home; we talked about our Food growth
opportunity; and we launched a review of
our cost base. Details of these are below
and well report back in the autumn on
the other key areas we are still reviewing.
If I was asked to sum up what M&S means
to me in one word, Id say special. M&S is
a fantastic brand that has a history of
serving our nation with fantastic products.
That is why we believe in making every
moment special for our customers.

Continuing to grow Food business:

> Build on strengths: focus on quality, innovation and
a choice;
> Commitment to value credentials: competitive pricing
while maintaining margin;
> Improved convenience: extended Simply Food store
opening programme.
Driving protability for shareholders:
> Continued tight control of costs and cash;
> Focus on shareholder returns.
Additional strategic questions, including International,
Internatio
UK store
estate and organisation to be answered in the autu
autumn.

STEVE ROWE CHIEF EXECUTIVE

I am really proud and privileged to be your

new Chief Executive. The most important
thing Ive learnt in my 25 years at M&S is that
we are at our best when we are completely
focused on our customers. My plan is to
keep things simple by putting our
customers at the heart of this business.

PRIORITIES
PRIORIT
TIES TO ADDRESS
FOCUS ON PUTTING CUSTOMERS AT TH
THE
HEART OF M&S AND DRIVING SALES GROWTH
G
Implementing actions to recover and grow Clothing
Cloth
& Home:
> Re-establish style authority: focus on product, quality
q
and t;
> Restore price position: lowering prices and redu
reduced
promotional stance;
> Enhanced customer experience: sharper range
ranges, better
availability and investment in store staffing.

decision
sion starts with them. Our actions are
driven
en by listening to what customers tell
us, not
ot by what we think is right for them.
We know who our customers are and we
e every one of them. M&S serves 32.2
value
on shoppers a year, equivalent to over
million
half the UK population and two-thirds of
dults. 20.1 million of those customers
its adults.
buy our Food, which means we have an
opportunity
ortunity with the over 12 million who
dont.
t. 58% of our customers are female,
and around half are over the age of 50.
Our most loyal customers account for
around
nd 11% of spend. Looking at who our
customers
omers are and how they shop with
M&S is crucial to our future. We need to
make
e more of M&S more relevant to our
customers
omers more often. There remain great
opportunities
ortunities for growth.
Read
ad more on p08

CLOTHING
THING & HOME
Our Clothing & Home division has many
ngths: we have leading market shares in
strengths:
many
y categories, perceptions of our quality
igh, and customers like many of our
are high,
vations. But as the UK clothing market
innovations.
has grown and changed in recent years,
ave consistently underperformed.
we have

OUR CUSTOMERS

hing & Home has been my focus

Clothing
e I took over running the division in
since
ember 2015 and turning around its
September
ormance is my number one priority.
performance

Our customers are now at the heart of

everything we do. This means that every

ook immediate action in some key

We took
s. We improved availability, sharpened
areas.

our price points and reshaped the structur

structure
of our Womenswear team to better reect
the way our customers shop. This new
structure means that garments are now
bought by product category such as
skirts, shirts, or trousers rather than by
M&S Collection and the sub-brands, such
as Autograph and Limited Edition. This way
we reduce needless proliferation. We have
also dropped General Merchandise as
the catch-all name for the non-Food half
of our business: we should be using the
same language as our customers to
describe our business.
We have a lot more to do. We have been
giving customers too many reasons not
to shop with us. They tell us that we have
not got the balance between fashion and
style right and that we dont offer enough
choice. They say that we are sometimes too
to
expensive and that our stores are difficult
to shop. In addition, we know that our
internal structure has meant that we have
not pursued areas of high growth quickly
enough. Our plan this year is to address the
th
root causes of these issues. We will continue
continu
to lower prices across the board and reduce
reduc
the number of promotions. We will put
increased emphasis on contemporary
styling rather than slavishly following
catwalk trends, and we will focus on
innovations that are genuinely useful to
our customers.
We know that our customers want to feel
that theyre getting great value every time
they shop with us. It is for the customer
not us to decide what constitutes value.

CUSTOMER AND BRAND

RECOVER AND GROW

CLOTHING & HOME
UK STORE
ESTATE

CONTINUE TO GROW
FOOD

INTERNATIONAL

ORGANISATION

COST REVIEW

FINANCIAL PLAN

But I would say that the equation

customers use when assessing value is
satisfaction minus price. Did they enjoy
their experience? How good is the product?
Does it t well or taste good? How was
the service? These are the building blocks
of satisfaction. Once the customer has
assessed these, she can subtract the
price and determine whether shes
received value.
FOOD
In our Food division we have an engine
for sustained, protable growth. The
opportunity remains for us to grow our
Simply Food store network in the UK and
internationally as we strive to make every
food moment special for our customers
around the world. We will continue to
innovate, with an emphasis on health,
convenience, special occasions and gifting.
We will offer customers real choice by
carefully tailoring our ranges to the
location of the store and the mission of the
shopper. Whether they want a pork pie or a
superfood salad, a pint of milk or a chicken
tikka prepared meal, we will strive to give
them the best there is. In addition to the
250 Simply Food stores we have already
committed to, we will open a further 200 by
the end of 2018/19 to make our great food
offer accessible to even more customers.
COSTS
We will continue to be prudent on costs.
In some cases, our processes have become
too complicated and we continue to review
the way we work with a view to simplifying it.

We will use any cost savings to invest in

more store colleagues. After all, they are the
people who are closest to our customers.
OUR PEOPLE
Fairness and consistency are important
to me. I believe in rewarding people for
success, wherever they work in the
company. We have reviewed how we
reward our employees and have proposed
a new approach to pay and pensions.
The proposed pay changes, which would
make us one of the best payers in UK
retail, would reward our people in a fair and
consistent way and include proposals for
a signicant base rate increase for our
Customer Assistants. The proposed new
approach to pensions would ensure we
offer all employees the same Dened
Contribution Scheme; a competitive
pension scheme that is sustainable for
the future. Members of the Dened Benet
Pension scheme would not lose any
benets they have previously earned
and will be auto-enrolled into the Dened
Contribution Scheme. We have started
a period of consultation with National
Business Involvement Group, the
appropriate representatives within
M&Ss network of elected employee
representatives, on both of these
proposals and will listen carefully to their
feedback. I believe that these changes
would mean we can offer one of the best
pay and benet packages in UK retail,
so we can keep retaining and attracting
the best people to our business.

Our values underpin everything we do...

INSPIRATION

INNOVATION
NNOVATION

INTEGRITY

IN TOUCH

We aim to excite and inspire our customers

We are restless in our aim

m to improve things for the better

We always strive to do the right thing

We listen actively and act thoughtfully

See my full strategic update in our

2016 Annual report

GOVERNANCE

Under the leadership of my predecessors,

Lord Rose and Marc Bolland, weve
delivered over 175 Plan A commitments,
won 230 awards, saved 500m, and made
a positive difference to the retail sector as
a whole through the Consumer Goods
Forum (CGF), Business in the Community
(BitC) and many other industry bodies.
Most recently, we made the case for
sustainability at the Paris Climate
negotiations (COP21). Now Im delighted
that its my turn to pick up the baton, to
help us push Plan A even further forward
and make even more of a difference to our
customers lives, to the communities they
live in, and to the planet we all depend on.

Weve achieved a lot in nine years of Plan A,

but Im determined that we achieve even
more in the years to come, and that our
customers and colleagues will be at the
heart of this.

PLAN A PERFORMANCE

OUR BUSINESS

Were very proud of our heritage, but were

rmly focused on looking forward. We know
that we have a responsibility to build a
successful, sustainable future not just
for our business and shareholders, but for
the communities we serve and the lives we
touch. And since its launch in 2007, Plan A
has been the catalyst for giving greater
focus and drive to how we do this.

Finally, we know that we cant be a

sustainable business, one that is good for
all, without teamwork inside M&S and with
other businesses and stakeholders so
well continue to prioritise partnerships in
all we do.

OVERVIEW

01 Chief Executives introduction

02 Implementing Plan A 2020
04 Connected value
06 2016 highlights

OUR PERFORMANCE

For 132 years, our customers have

recognised that M&S is a business with
a greater purpose, one that seeks to do
things in a responsible way. This means they
can be proud to shop with M&S, secure in
the knowledge that every store they visit,
every colleague they meet, every product
they buy, makes a positive difference.

So, well integrate Plan A even further into

M&S and the way it does business. Well be
clearer with our customers about what we
do on their behalf and help them to make
a difference too. We know Plan A is a win
win approach a simpler, more efficient,
less wasteful business is better for the
planet and for our bottom line so well
chase that even harder.

WHAT'S IN THIS REPORT?

GOVERNANCE

Every day, in hundreds of communities

across Britain and overseas, we try to
enhance the lives of those customers,
through our attractive stores and website,
our exceptional products and services,
and our fantastic people. But theres more
to M&S than that.

We know our customers are concerned

about the future and that they expect us
to take a lead in helping them enjoy happier,
healthier, more fullling lives. We know
their concerns are growing and they
want us to work with real pace to make
a positive difference.

FINANCIAL STATEMENTS

Im very proud to have become CEO at

M&S. Since my rst day at our Croydon
store in 1983 Ive been passionate about
this business and its 32 million customers.

02
MARKS AND SPENCER GROUP PLC

2016 OVERVIEW

IMPLEMENTING
PLAN A 2020
Weve never hesitated to update Plan A, because
after all, change is the only constant of business life.
The marketplace changes, leaders change, new issues emerge,
new solutions are developed. A businesss commitment to
the long haul of truly sustainable change is constantly
being tested and questioned.
MIKE BARRY SUSTAINABLE BUSINESS DIRECTOR

The last 12 months have seen more good

progress on Plan A. Weve successfully
delivered a further 22 commitments.
Nearly three quarters (73%) of all M&S
products now have a strong Plan A story
to tell (64% last year) and weve made
notable progress on improving our energy
efficiency (-39%), water efficiency (-31%),
and reducing food waste (-9%). Weve also
created 2,002 work placements for young
people who face barriers to employment.
Weve had our challenges too. We havent
succeeded in opening ve International
sustainable learning stores, weve not
yet managed to deliver our integrated
marketing goal, and weve fallen behind
on our targets to shwop clothing.
Our continued good progress overall is
crucial because 2015 was an important
year in the evolution of sustainable
business. The Paris Climate negotiations
(COP21) and the launch of the UNs 17
Sustainable Development Goals (SDGs)
created a long-term direction of travel
for business for the rst time. This collective
willingness to take action is welcome,
because the social, environmental
and economic challenges confronting
businesses are growing and becoming
more complex.

PROGRESS
57/104 commitments Achieved
5 commitments Not achieved
1 commitment Behind plan
New global collaborations

NEW LEADERSHIP
Theres no greater test of a businesss
commitment to a sustainable future,
than when it changes its CEO. M&S has
stood this test well. In 2007, Lord Rose
launched Plan A. In 2010, Marc Bolland
stepped in and championed Plan A
throughout his six-year tenure. And now
Steve Rowe has assumed the top job,
with an unequivocal commitment to
drive Plan A even harder and make it
even more relevant for our customers.
NEW TRENDS
New social and environmental issues are
springing up all the time. Many of these are
unique to a particular product, factory or
commodity. But there are big changes too.
Over the last 12 months weve noted the
emergence of three in particular.
Firstly, human rights. Its clear that auditing
social risks in supply chains isnt enough.
A much more ambitious vision of human
rights has emerged. M&S has become
a signatory to the United Nations Global
Compact and Human rights is now so
important to us that were issuing a
separate Human Rights Report alongside
this Plan A Report, to explain what were
doing now and what we intend to do in
the future.

RESPONSE
Development of Human
Rights policies and actions
Improved transparency
Launch of new local
Plan A initiatives

Similarly, our approach to reporting has

had to evolve signicantly. We know its no
longer enough to produce a once-a-year
report about our performance. Thats why
weve undertaken a major upgrade of our
website, explaining our policies, practices,
learning and views in much more detail.
Weve also published our rst interactive
supply chain map for our Clothing business,
showing the locations around the world
that we source from.
Finally, were seeing a growing demand for
local solutions to the issues people face.
They are particularly interested in how
big global issues impact their immediate
surroundings and lives. This year weve
taken a real step forward in our ability
to connect personally and intimately with
our customers and their lives. Our Spark
Something Good campaign has galvanised
action in the communities we serve. In
London, Dublin, Manchester, Swansea and
Edinburgh our customers and colleagues
have come together to make a difference
locally. All our food stores are connected
with local charities through the Neighbourly
social network. All our stores are fundraising
for a charity in their local community. Our
customers are able to select a charity they
wish to donate to every time they use their
Sparks Card.

VISION
Extending collaborations
Responding to an ever- changing
market place
Reviewing and updating Plan A

03
PLAN A REPORT 2016

57

90%

5,800

PLAN A 2020
COMMITMENTS ACHIEVED
TO DATE

OF M&S SPARKS CARD

CUSTOMERS HAVE NOMINATED
A BENEFITING CHARITY

WORK PLACEMENTS
FOR YOUNG UNEMPLOYED
PEOPLE SINCE 2014

MIKE BARRY
SUSTAINABLE BUSINESS DIRECTOR

Our Energy business saw 51,000 people

vote for local community energy schemes
that were seeking funding from us.
Personalisation and localisation are key to
engaging large numbers of people with the
need for sustainable change.

OVERVIEW

SOME HIGHLIGHTS OF THE YEAR

MAKING PLAN A LOCAL

NEW SOLUTIONS

Above: All M&S operated UK and

ROI stores now have access to local
surplus food redistribution charities
through the Neighbourly social network.
Left: M&S Sparks loyalty card
connects our customers to causes
that are important to them.

GOVERNANCE

Nine years since launch, Plan A continues

to help us anticipate the rapid social,
environmental and economic shifts in the
global economy. Its a strong and constant
reminder to our customers and other
stakeholders that we are a business with
a strong core purpose and integrity. It has
proved t for purpose despite leadership
changes and the emergence of new issues
and new solutions.

PERFORMANCE

Of course there are issues that do not

change. Climate, waste and resource use
were issues 10 years ago and will be issues
in 10 years time. What changes is how we
address them. Today, more and more
were nding that to scale-up change at
the pace thats required, we need to build
business and stakeholder coalitions.
Our role is to convene and lead these
coalitions. We, along with many other
good businesses, played an important role
at COP21 showing Government leaders
that decisive climate action was good for
economic growth, jobs and societal
wellbeing. Similarly, at the Consumer Goods
Forum (CGF) weve been privileged to play
a central role in driving common action on
forced labour, deforestation, low carbon
refrigeration, food waste and the circular
economy, together with many of the worlds
largest consumer goods companies.

04
MARKS AND SPENCER GROUP PLC

OUR BUSINESS

CONNECTED VALUE

CORE OBJECTIVES

Group nancial
objectives
Grow Group revenue

INPUTS

BUSINESS MODEL THE M&S DIFFERENCE

Our resources and relationships

Across our business, we depend
upon key resources and
relationships to create nancial,
non-nancial and strategic value.

Increase earnings
and returns
Strong cash generation
See KPIs in our Annual
Report on p18

FINANCIAL

How our activities deliver nancial value

1. Listen & Respond
Understanding our customers
changing needs informs
every product we make and
service we offer.
2. Strategy & Planning
Robust nancial management
ensures we are able to continue
to invest in our business and
deliver protable growth for
our shareholders.
3. Develop & Design
New ideas fuel future performance,
which is why attracting and retaining
the right talent is central to the future
of our business.

Non-nancial
objectives

OUR PRODUCTS
& CHANNELS

Engage, serve and

retain customers
Foster a skilled,
motivated and
engaged team

OUR INTELLECTUAL
CAPITAL

Sourcing products
with integrity
Efficient and
responsible operations
See KPIs in our Annual
Report on p19

Strategic
objectives
Driving growth
Reaching customers

OUR PEOPLE

4. Source & Buy

We capitalise on the strong,
long-term relationships we have with
our suppliers to deliver efficiencies,
improve margins and drive
protability without compromising
on the quality of our products.
5. Brand & Sell
Our brand is at the heart of the M&S
difference and we create unique
products that drive nancial value.
6. Serve & Engage
We build and maintain customer
loyalty by investing in customer
service and linking it to our
employee benets.

How our activities deliver non-nancial value

1. Listen & Respond
Our customers trust in the M&S
brand is a key point of difference.
We retain this competitive advantage
by doing things in the most
responsible way we do the work
so our customers dont have to.
2. Strategy & Planning
We improve efficiency and reduce
waste across the business through
the effective use of our resource
and sourcing systems.
3. Develop & Design
By cultivating talent and
encouraging entrepreneurialism, we
have an engaged and autonomous
workforce empowered to develop
innovative new products and ideas.

4. Source & Buy

We are leading the way on sourcing
products with integrity to exceed
customers expectations on quality,
safety and sustainable sourcing.
5. Brand & Sell
We have built our brand on robust
standards of responsibly sourced
products and services.
6. Serve & Engage
We bring our brand to life by driving
engagement and participation
in-store, online and through Spark
Something Good.

How our activities deliver strategic value

OUR
STAKEHOLDERS

Improving protability
See KPIs in our Annual
Report on p20-21

NATURAL
RESOURCES

1. Listen & Respond

By analysing what our customers
want, we ensure our growth plans
are right for the future of M&S.
2. Strategy & Planning
By carefully managing our property
portfolio, we ensure we have the
right stores in the most convenient
locations, meaning we can reach
more customers and deliver
sustainable sales growth.
3. Develop & Design
By constantly improving product
quality and choice, we drive growth
by making M&S more relevant to
our customers more often.

4. Source & Buy

Our progress towards a more
exible and direct sourcing
operation is beneting our Clothing
& Home margins.
5. Brand & Sell
We sell our products through our
own branded channels, empowering
us with the ability to grow and
develop them in the way that is
right for our customers.
6. Serve & Engage
The rationale behind every strategic
decision starts with our customer
and we drive a high-performance
culture built around giving them
great products and service.

05
PLAN A REPORT 2016

10

11

MARKS AND SPENCER GROUP PLC

STRATEGIC REPORT

ANNUAL REPORT AND FINANCIAL STATEMENTS 2016

OUR BUSINESS

CREATING
SUSTAINABLE VALUE
ALUE

FIND OUT MORE

Read more about Risk on p27-29

Read more about KPIs on p18-21

OUR BUSINESS

Read how our b

business model creates Financial, Non-nancial and Strategic value on p12-13

OUR BUSINESS M
MODEL

& RESPOND
TEN

OUR RESOURCES & RELATIONSHIPS

PLAN A

ST
R

&E

Aim to improve
things for the
better

SIG

INTEGRITY

AN

DE

OUR STAKEHOLDERS

NATURAL RESOURCES
Sourcing responsibly and using
natural resources efficiently

SE

&

&

Strive to do
the right thin
thing

Developing our employees

and their knowledge

Building and nurturing relationships with

our customers and suppliers, and in the
communities in which we operate

OUR INTELLECTUAL CAPITAL

Strengthening
hening our brand through
on and protection of our
creation
ntellectual property
intellectual

INNOVATION

MAKING EVE
EVERY
MOMENT
SPECIAL

L
PLAN A

SO U R

DE

VE

CE & B U Y

DIFFERENCE
THE M&S DIFFER
LISTEN & RESPOND

STRATEGY & PLANNING

DEVELOP
ELOP & DESIGN
DESIG
GN

SOURCE & B
BUY
UY

BRAND & SELL

SERVE & ENGAGE

Activities: Our customers are our most

important stakeholders. Through detailed
understanding of their needs and changing
behaviours, we can achieve our core
purpose of making every moment special.
Our Customer Insight Unit analyses
feedback from over 60,000 customers
a month. We also gather insights from
our team of over 65,000 employees who
serve customers in our stores. Furthermore,
we engage with over 5 million followers
daily on social media. By continually
analysing what they tell us, we can equip
our people with the insight to learn and
adapt to meet our customers needs.

Activities: We create long-term sustainable

value through the delivery of our strategy
and prudent nancial management.
We will continue to invest in the business
to support future growth whilst tightly
controlling costs. It is not only nancial
resources that need efficient management
it is natural resources too. Through Plan
A, we are evolving a more sustainable way
of retailing. Plan A inuences every stage
of our planning, and infuses all that we do.

Activities:
vities: By cultivating talent and
essing our peoples ideas, we can
harnessing
inue to develop the delicious
continue
and stylish products that our customers
love. 65% of our clothing ranges are now
gned in-house and this will rise to 70%
designed
e continue to create value from our
as we
lectual capital. The skills in our Food
intellectual
m cover the breadth of the industry,
team
from nutrition to marine biology, and our
uct developers are experts in scouring
product
the world for the latest trends and avours.

Activities: A sustainable supply chain is

key to creating sustainable value. Our team
of 450 employees in nine regional sourcing
offices in our key clothing sourcing market
markets,
including Bangladesh and China, are
responsible for sourcing our products
efficiently and with integrity, working
collaboratively with our buying and design
teams. We have excellent relationships with
our Food suppliers, and have worked with
many of them for over 20 years, and some
for over 75 years. All of our suppliers must
adhere to our Global Sourcing Principles,
which cover every element of workers
rights and working conditions.

Activities: Our own brand model gives

us a signicant competitive advantage.
Our products are developed by M&S for
M&S. By selling our own unique products
under our own brand, we forge lasting
relationships with our customers. They
know that we do the right thing: 73%
of our products have a Plan A attribute.
We sell our products through our own
brand channels: M&S stores and the M&S.
com website. The M&S brand is the thread
that runs through everything we do.

Activities: We know that our customers

want great value every time they shop at
M&S. Value is about much more than price;
its also about experience. So offering great
customer service is absolutely crucial to
maintaining customer loyalty, and we put
it at the heart of how we train and reward
our store teams. Along with serving our
customers well , forging strong links with
the communities in which they live creates
long-term value. By supporting causes
close to our customers and our peoples
hearts, we ensure that these key
stakeholder groups work together for
the good of their local neighbourhoods.

Outcome: By strengthening our nancial

position through the delivery of improved
prots and strong cash ow, we are
improving returns to shareholders.

Outcome: Knowing what our customers

want helps us tailor our products, channels
and services around them so that they
have more reasons to shop with M&S.

RELATED RISK FACTORS

Financial performance risks

Outcome: The value created by the M&S

brand is our key point of difference and
distinguishes us from our competitors.

Outcome: Our sourcing strategy is

driving margin improvements and we
are increasing the number of products
with a Plan A quality.

ACCOUNTABILITY
Financial accountability

OPERATING COMMITTEE

2. Changing consumer
behaviours

SENIOR LEADERSHIP GROUP

>

1. Clothing & Home

transformation

4. Clothing & Home supply chain

and logistics network

See Governance in our

Annual Report on p42-46

5. IT integration

See Remuneration in our

Annual Report on p52-53

10. International

Outcome: We have an increasingly

engaged workforce who live our values
of Integrity and In Touch, and who are
committed to our customers.

OUTPUTS

OUTCOMES

Key nancial measures

Financial value created

Group revenue
Gro
BOARD

>

There are a number of risks related

to how we deliver nancial value:

come: Direct design gives us greater

Outcome:
bility and control over how we source
exibility
e can better respond to the market
so we
and customer demand. The expertise in
our Food team gives us the authority to
er the new and exciting products
deliver
that drive sales.

See our Business model on the inside

cover (and in full: 2016 Annual report)

Underlying Group PBT

Underlying earnings per share
Dividend per share
Return on capital employed
Free cash ow (pre dividend)
See KPIs in our Annual
Report on p18

Strong prots build

strong cash position

OVERVIEW

IN TOUCH
Listen actively
and act
thoughtfully

GOVERNANCE

SERVE

Maintaining
aining our channels and
supply
ly chain infrastructure to
meet
et customer demand

NING
LAN
&P

NG
AG
E

INSPIRATION
INSPIRATIO
Aim to excite and
a
inspire our customers
custo

CORE
PURPOSE

OUR PEOPLE

Y
EG
AT

OUR PRODUCT & CHANNELS

BR

These values inuence how we behave and they

run through everything we do they make the
M&S difference: making every moment special
through the products and services we offer
our customers in the UK and internationally.

FINANCIAL
Generating
enerating returns for
our stakeholders through
ective management of
effective
ur nancial resources
our

OUR PERFORMANCE

LIS

OUR RESOURCES
SOURCES & RELATIONSHIPS

We create long-term value through the

effective use of our resources and relationships.
We manage these in line with our core values of
Inspiration, Innovation, Integrity and In Touch.

FINANCIAL STATEMENTS

OUR BUSINESS MODEL

Returns to shareholders
Taxes to government
Increased investment
opportunities
Employee rewards

See Risk in our Annual Report

on p28-29

2. Changing consumer behaviours

>

OPERATING COMMITTEE

1. Clothing & Home transformation

SENIOR LEADERSHIP GROUP

3. Business transformation

9. Cyber/Information security
See Risk in our Annual Report
on p28-29

Strategic performance risks

There are a number of risks related
to how we deliver strategic value:
1. Clothing & Home transformation
2. Changing consumer behaviours
3. Business transformation
4. Clothing & Home supply chain
and logistics network
6. Food competition
10. International

>
OPERATIONAL
PLAN A COMMITTEE

See p34-35 in this report

Strategic accountability

Total Food customers and average

number of shops per customer
Total Clothing & Home customers
and average number of shops
per customer
Employee engagement score
% of products with a
Plan A quality
Greenhouse gas emissions
(tonnes)
Greenhouse gas emissions (psf)

Culture where innovation

and agility thrive
Better trained and fully
committed employees
Stronger relationships with
suppliers and communities
Maintained and improved
reputation with consumers

See KPIs in our Annual

Report on p19

Key strategic measures

Strategic value created

Food UK revenue
BOARD

>

8. Clothing & Home

ethical sourcing

ADVISORY
PLAN A COMMITTEE

OPERATING COMMITTEE

>

7. Food safety and integrity

Non-nancial value created

PERFORMANCE

BOARD

Key non-nancial measures

SENIOR LEADERSHIP GROUP

See Governance in our

Annual Report on p42-46
See Remuneration in our
Annual Report on p52-53

Food gross margin

UK space growth Food

Growth in sales, product

range and presence

Clothing & Home UK revenue

Supply chain efficiency

Food LFL sales growth

Clothing & Home gross margin

Clothing & Home UK LFL
sales growth
International sales

11. M&S.com business resilience

International operating prot

See Risk in our Annual Report

on p28-29

International space growth

M&S.com sales
M&S.com weekly site visits
See KPIs in our Annual
Report on p20-21

Increased customer base

with broadening appeal
A more dynamic, exible
and agile business,
delivering stronger margins
GOVERNANCE

There are a number of

risks related to how we deliver
non-nancial value:

Non-nancial accountability

>

Non-nancial performance risks

06
MARKS AND SPENCER GROUP PLC

PLAN A

2016 HIGHLIGHTS
Together with our partners, employees, customers and suppliers
weve achieved a lot to be proud of this year including our
work to build Plan A into all M&S products and engage more of our
customers, Spark Something Good, and programmes that support
thousands of people working in our supply chains.
PLAN A

ECONOMIC
BUILDING PLAN A INTO M&S PRODUCTS
AND HOW WE SELL THEM.

73%
OF M&S PRODUCTS HAVE AT LEAST
ONE PLAN A QUALITY

As of April 2016, based on the volume

of items sold worldwide, 73% of M&S
products have at least one special
Plan A environmental or social quality
(last year 64%).

Making Healthy High Streets: Working

with Business in the Community were
helping to make a difference across 67
UK high streets.

90%
OF SPARKS CARD HOLDERS HAVE
NOMINATED A BENEFITING CHARITY

In October 2015, we launched our Sparks

customer reward card. In addition to
discounts and other benets, card holders
can nominate a charity to receive 1p from
every transaction they make with M&S.
Sparks points are awarded for shwopping
clothes. 3.5 million customers (90% of all
card holders) have nominated a charity to
benet from their M&S purchases.

Clothing & Home Sustainable Learning

Products: This year we launched a re-usable
shopping bag made in the UK from
up-cycled hotel linen. It was designed by
Barbara Hulanicki and prots from all sales
were donated to UNICEF to protect children
in danger. We also launched mens Footglove
Earth shoes, which are manufactured using a
range of recycled and sustainably sourced
materials, and the Limited London
Collection of clothing, designed in the
UK and made using a range of recycled
and more sustainable fabrics. All these
products were manufactured in
factories that meet M&S Eco Factory
standards. In October 2015,
we also launched the Livia Firth
eco-edit Collection comprised
of products with Plan A qualities.

07
PLAN A REPORT 2016

Zero

39%

9%

NET CARBON EMISSIONS

FROM M&S OPERATIONS FOR
FOUR CONSECUTIVE YEARS

IMPROVEMENT IN UK AND ROI ENERGY

EFFICIENCY PER SQ FT SINCE 2006/07
(AFTER WEATHER ADJUSTMENT)

REDUCTION IN UK RETAIL FOOD

WASTE PER SQ FT SINCE 2013/14

PLAN A

ENVIRONMENTAL
OVERVIEW

REDUCING THE IMPACT OF M&S

OPERATIONS ON THE ENVIRONMENT.

100%
OF ELECTRICITY FOR OUR UK AND
ROI STORES FROM RENEWABLE SOURCES

Weve also signed contracts to increase our

annual procurement of bio-methane up to
172,000 MWhs a year, from 2016/17.

100%
OF OPERATIONAL WASTE FROM M&S STORES,
OFFICES AND WAREHOUSES WAS RECYCLED
IN SOME FORM

PERFORMANCE

For the fth consecutive year we sent

no waste to landll. We also reduced our
total amount of waste by 9% compared to
last year.

2.7 million
USED GARMENTS DONATED BY M&S CUSTOMERS TO
OUR CLOTHES RE-USE AND RECYCLING SCHEMES

400,000
M&S ENERGY COMMUNITY ENERGY FUND TO
SUPPORT PROJECTS ACROSS GREAT BRITAIN

In July 2015, we launched the M&S Energy

Community Energy Fund. We received
246 applications, from which we shortlisted
132 projects to compete for the public vote;
attracting 51,000 votes. Between them, the
21 winners received two national prizes of
40,000 and 20,000 and funding for
19 regional projects of 12,500.

There were also ve special Judges

Prizes chosen with help from our judges,
Ed Davey, Giles Bristow, Hugh FearnleyWhittingstall, Rob Love, Louise Innes and
Jonathan Hazeldine of M&S, for the projects
that were judged to go the extra mile for
their community.
GOVERNANCE

In addition to our well established

Shwopping programme with Oxfam in
the UK, weve now launched similar clothes
recycling and re-use schemes at our stores
in the Czech Republic and Hong Kong.
In total, we collected 2.7 million garments
last year. We also continued to work on a
two year research project with the University
of Cambridge Institute for Manufacturing,
funded in conjunction with Innovate UK,
looking at different approaches to reduce
the environmental impact of clothing by
using circular economy thinking.

08
MARKS AND SPENCER GROUP PLC

PLAN A

2016 HIGHLIGHTS
CONTINUED

PLAN A

SOCIAL
IMPROVING PERFORMANCE ACROSS A WIDE
RANGE OF SOCIAL ISSUES IN M&S OPERATIONS.

5,800
WORK PLACEMENTS FOR YOUNG
UNEMPLOYED PEOPLE

Over two years weve offered support to

more than 5,800 young unemployed
people, with 60% of those who completed
their placement nding employment.
This programme is continuing in 2016/17.
In addition, 106 M&S suppliers have worked
with us to provide an additional 1,393 work
placements.

5.25m
RAISED FOR HEALTH AND WELLBEING CHARITIES

This included 2.4m for Breast Cancer Now

through a range of activities, including
Breast Cancer Awareness Month, Fashion
Targets Breast Cancer and Charity
Christmas cards.
Once again, M&S Cafes hosted Macmillan
Cancer Supports Worlds Biggest Coffee
Morning, which together with other
activities throughout the year, raised over
2.2m including more than 1m raised by
M&S employees.
Diversity and succession: 36% of the M&S
Board and 41% of senior management
positions held by women. 71% of our
appointments to our 150 most senior
vacancies made internally.

36%

41%

Female Directors
on the Board

Female senior
managers

Over 24 months,
24 towns and cities
will benet from Spark Something Good Community Projects that each aim to support
24 charities with the help of M&S employees and customers. So far, over 1,700 employees
and customers have taken part at events in London, Manchester, Dublin, Swansea and
Edinburgh.

09
PLAN A REPORT 2016

99%

91,000

100%

OF WOOD USED IN M&S PRODUCTS

AND OPERATIONS FROM FORESTY
STEWARDSHIP COUNCIL RECYCLED
OR FROM SOURCES THAT PROTECT
FORESTS AND COMMUNITIES

PEOPLE WORLDWIDE HAVE BEEN

HELPED BY OUR GLOBAL COMMUNITY
PROGRAMME IN 2015/16

OF THE PALM OIL USED IN M&S

PRODUCTS WAS RSPO CERTIFIED

PLAN A
IMPROVING ENVIRONMENTAL AND SOCIAL
PERFORMANCE IN SUPPLY CHAINS.

48%

42%

OF M&S FOOD COMES FROM SUPPLIERS THAT MEET

THE M&S SILVER SUSTAINABLE FACTORY STANDARD

OF THE COTTON USED TO MAKE M&S PRODUCTS

FROM MORE SUSTAINABLE PRODUCTS

762,000

And weve removed all plastic microbeads

that can cause marine pollution from M&S
wash-off cosmetic personal care products,
as of January 2016. In addition, 28% of the
leather we used this year came from
Leather Working Group certied tanneries.

PERFORMANCE

48% of all M&S food products are now

provided by Silver level suppliers (last
year: 32%). To achieve this standard,
a site must be at the Silver level or above
across all three areas of human resources,
environmental performance and
resource efficiency.

OVERVIEW

SUPPLY CHAIN

WORKERS IN THE M&S CLOTHING & HOME SUPPLY

CHAIN TRAINED BY M&S SINCE 2010

Supply chain
transparency
Weve published an interactive map
online, showing nearly 700 suppliers
worldwide that make M&S clothing,
accessories and footwear.

GOVERNANCE

See: interactivemap.marksandspencer.com