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Marks & Spencer

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Marks & Spencer is the UK's biggest non-supermarket retail group, selling a range of food, clothing and home goods under the banner of "luxury for less". Once Europe's most admired retailer, the group has struggled for several years with flat or declining performance in its fashion business. M&S appeared to have rediscovered its direction again in 2002 after four disastrous years of profit slumps and takeover rumours. That turnaround cost the chain much of its presence in Europe and the US, and also the pride, even arrogance, which led to its near-downfall in the first place. But it proved only a short-term fix. Another blip at the end of 2003 brought fresh doubts regarding M&S's strategy. A hostile takeover by retail entrepreneur Philip Green was narrowly defeated, but the progress of recovery has remained mercurial. Although the group appeared to have regained its footing by 2006, that peak was followed by another gradual decline, especially in the fashion side of the business. M&S remains worryingly susceptible to the effects of downturns in consumer confidence but its biggest weakness is the continuing erosion of its clothing operations.


Who handles M&S's advertising? Click here for Agency Account Assignments for Marks & Spencer. Marks & Spencer declared "marketing and related" expenses of £163m for the year to March 2017.


See Retailing Sector and Clothing Sector indexes for other companies.

Brand & Activities

Until the late 1990s, M&S was widely regarded as one of the UK's most reliable and respected businesses, a trusted name on the High Street and a financial exemplar. It was the first mass-market retailer in Britain - and one of the first in the world - to introduce own-brand products, originally under the St Michael label. It was among the country's biggest exporters of clothing, four times winner of the Queen's Award for Export Achievement, and the first retailer in the world to get a AAA credit rating. In 1994 it was described by the Financial Times as "Europe's most respected company".

But times can change. In 1999, sales suddenly began to slow, and profits slumped. As the decline sharpened, management did little or nothing to repair the damage, writing it off as a temporary blip. But in truth, the slump was a sign of staleness and an arrogant refusal to keep step with the rapid changes being forced through by other mainstream retailers. The British public effectively fell out of love with Marks & Spencer.

A new management team, appointed in 1999, appeared to have fixed the problem, but the repair was only temporary. Another fall in sales led to a second hostile takeover bid from entrepreneur Philip Green, and yet another management team, led by Stuart Rose, was appointed to protect M&S's independence. (Philip Green eventually abandoned his pursuit of M&S to focus his attentions on his newly acquired Arcadia Group).

Progress since then has suffered repeated setbacks. Profitability recovered strongly during 2005, and market share followed suit for the first time in several years during 2006. But there were signs that this upturn may have led to a return of complacency. This was sharply corrected by disappointing performance over Christmas 2007, well below that of rival retailers. News of M&S's lacklustre sales caused the company's share price to plunge by 20% to its lowest level since 2004. Those concerns were dealt with promptly and trading improved once again over the next few years. Another change of management in 2010 was intended to deliver further strong growth; instead though it has seen a further continuing erosion of performance, especially on the fashion side of the business.

M&S is one of the UK's leading retailers of clothing, foods and homeware. In 2006, the group claimed that 15m customers a week visited its stores, but was also forced to acknowledge that only two-thirds of them made a purchase during the visit. It had successfully improved on this performance by early 2009, by which point store traffic had risen to 21.6m customers per week. It has fallen back since then to 20.0m per week in ye 2014. M&S's target audience is middle class shoppers in the 35 to 55 age range, but more than 75% of turnover is generated from a slightly older market, aged 45-plus. The group's UK network has expanded dramatically since 2003 and by 2017 covered 942 locations, mostly situated in England. Combined sales were £9.44bn in the year to 2017.

Traditionally, most stores sold a mixture of all three product ranges, but the group has accelerated the roll-out of standalone food stores under the M&S Simply Food brand, including the conversion of some existing full-range outlets. Many of the new food stores are located in service stations, operating on motorways as joint ventures with Compass or within BP petrol stations. By Spring 2017, only around a third of the total UK estate - 343 stores - sold clothing and homeware. There were 383 franchised M&S Simply Food outlets. For years, the group has struggled to square one particular circle, which is that a large proportion of its customers buy the company's food but steer clear of its clothing because they believe it to be mass-market; while another customer group buys the clothing but believes the food to be too pricey compared to supermarket fare. Of the two, the food side of the business has been the apparent winner. Historically a clothing store which also sold food, M&S is, according to the split in its current sales, now a food store which also sells clothing. For the year to 2017, food accounted for 60% of UK revenues and general merchandise 40%. (Just over a decade earlier, food was only 48%, compared to 52% for general merchandise).

Despite such fears, Marks & Spencer remains the UK's leading fashion retailer by revenues. In the year to March 2015, overall market share was 8.7% by value, still above second-placed Next. However, that is far below its late 1980s peak of almost 20%. As recently as 2010 it was 10.5%. In volumes, it now ranks third behind Primark and Asda's George. M&S seeks to be perceived as superior to other mass-market retailers, with a brand message of "Luxury for Less". However it is generally regarded as more conservative or traditional than equivalent high street brands such as Zara or H&M. Womenswear collections include the flagship Per Una range, with sales of around £450m, supported by Classic, Autograph, Limited Collection, Portfolio and Indigo. Its share of the womenswear market has steadily fallen, down to 9.0% for ye 2015. Traditionally, the group's strongest line of all is its lingerie and underwear, a segment in which it is the undisputed #1 in the UK with 26.3% market share by value. It is the market leader in UK menswear, with brands including Blue Harbour and North Coast casual wear, Autograph premium apparel and the upmarket Collezione Marks & Spencer tailored range. Share was 10.8% by value.

After several years of slow but steady decline, combined UK revenues from clothing and home goods slipped by another 4% in the year to 2017 to £3.79bn. Home sales accounted for approximately £350m of that total.

M&S's food offering includes a broad selection of superior prepared meals, side-dishes and produce, as well as drinks and general household staples. The company's food offering is widely perceived by consumers to be higher in quality than that of other supermarket retailers. Inhouse brands include Cook!, Gastropub and Eat Well, as well as a value-priced range introduced in 2012 under the name Simply M&S. Until 2008, all products were private label. That year, however, struggling with a dip in sales, the group opened its shelves to a selection of almost 400 "must have" branded products including Weetabix, Marmite and Heinz Tomato Ketchup. That decision was partially reversed in 2011, and the range was cut to just 100 third-party brands from the UK, and another 100 imported brands that are exclusive to M&S in the UK. In addition, by Spring 2013, close to 330 outlets also offered in-store eating, either with a coffee shop under the Café Revive banner, or deli bars, hot food takeaway counters, or even a full-service M&S Restaurant. Gross UK revenues from food in the year ending 2017 rose 2.5% to £5.65bn.

A number of the group's non-core services have been contracted out to allow M&S management to concentrate on the main retail business. After disappointing performance in 2002 and 2003, the home furnishings division was scaled down dramatically, although it began to expand again during 2006. The financial services division, which operates a combined storecard and credit card, as well as various loan, insurance and savings products, was sold in 2004 to HSBC, which continues to run the business under license. In 2012, trading on its position of trust with customers, the group launched a full instore banking service, also in partnership with HSBC, offering current accounts and mortgages as well as the existing credits cards business. This now operates as M&S Bank. M&S receives a 50% share of profits from ongoing operations; however these have been dented since 2015 by charges to compensate customers for mis-sold personal protection insurance. A new rewards scheme was launched in 2015 under the Sparks banner.

Also in 2005, M&S farmed out joint responsibility for development and management of its e-commerce website to Amazon. The new service was launched with a fanfare in early 2007, and what the group now calls multi-channel sales have more than doubled since then, reaching a reported £652m in the year to 2013. The partnership with Amazon finally came to an end in 2014, with the launch of a new e-commerce site developed inhouse. That site struggled at first with technical problems, but gradually sorted itself out during the course of the year. However, the result was a 2% decline in online sales for the first year of operation. There was a solid recovery for the following year, with sales for ye 2016 up 24% year-on-year. The increase for ye 2017 was just 5% to £863m.

Another major change since the early 2000s has been a commitment to marketing. Until 2002, Marks & Spencer had traditionally refused to sully its reputation with advertising. It has now grown to be one of the country's leading advertisers. Marketing is built around a stable of recognisable brand ambassadors, led for several years by famous 60s model Twiggy. The British pop group Take That were featured several times as ambassadors for the company's menswear range, and even iconic singer Shirley Bassey took a starring role in one seasonal spot. The model portfolio has been refreshed several times, first in 2009 and again in 2011, with some familiar faces dropped and others added. Twiggy remained the core of the group until 2013 when a new high-class line-up was unveiled, including actress Helen Mirren and artists Tracey Emin. That failed to win over shoppers, and the celebrity endorsement approach has since been abandoned. A funky new approach was unveiled in 2014, for both food and fashion. However, the group finally began to seek a new approach in 2016, calling a review from longtime partner RKCR/Y&R. The account moved instead to Grey.

Outside the UK, Marks & Spencer lends its name to around 480 franchised or joint venture stores, in addition to online service to 59 countries. The biggest chain is in Greece, where there are 35 retail outlets operated by the Marinopoulos Group, making M&S the country's second-largest clothing retailer. M&S acquired a 50% in the previously franchised business in 2008, as well as 50% of its Central European franchisee COMS. There are also 10 or more Marks & Spencer franchise stores in each of Indonesia, Thailand, South Korea, the Philippines and Turkey, as well as operations in more than 20 other countries. The group still owns eight stores in Hong Kong, although it has been trying to convert these to a franchise. Several wholly-owned retail operations in Canada and continental Europe were sold after 1998, as part of the group's restructuring. One of the last businesses to be divested was Kings Supermarkets, a chain of 27 stores in the US. After several years seeking a buyer for this business, Kings was sold to a US-based investor consortium in 2006 for $61m. In 2011, the group reestablished a direct retail presence in France for the first time since closure of its 18 stores there in 2001. International operations contributed revenues of £1.18bn in the year ending 2017.


Despite CEO Stuart Rose's much vaunted promise in 2004 to rescue the business, there was only modest improvement after his first year on the job. Net pretax profits for the year to 2005 continued to fall, prompting Rose to admit, "It is fair to say that there is more to do than I had previously thought." For the year ending 2006, group revenues from continuing operations rose 4% to £7.8bn. In the UK, like-for-like sales edged up just over 1%, mainly as a result of 3.6% increase in food. Clothing sales remained flat, despite an improvement in the second half of the year. However, pretax profits jumped 35% to £751m, the first real sign of progress for several years. Figures for the year to March 2007 were much stronger, with total sales up 10% to £8.6bn, and like-for-like sales up over 6%. Pretax profits were up 26% to £937m. For the year to March 2008, there was a further 5% increase in sales to £9.0bn. Pretax profits broke the £1bn barrier for the first time since 1998, rising 20% to £1.1bn, helped along by property disposals. It couldn't last. For the year to 2009, sales inched up by less than 0.5% to £9.1bn, and pretax profits fell back to their lowest level since 2005 at £706m. For the year to 2010, Stuart Rose's last as chief executive, group revenues rose 5% to £9.5bn, and pretax profits were flat at £703m.

New CEO Marc Bolland was able to report an uplift in his first year in the job. For the year to 2011, revenues edged up to £9.7bn. Reported pretax profits were £780.6m, up strongly on the year before, still well below past performance. However performance for the following period was less impressive. Revenues rose by a further 2% to £9.9bn, but pretax profit slipped back by 16% to £658m, the first fall in earnings for three years. There was further disappointment in the year to 2013, despite a 1% increase in revenues to just over £10.0bn for the first time. Pretax profits fell 14% to £564m, mainly as a result of a sharp rise in finance costs. The UK contributed just under 90% of revenues.

For the year to March 2014, reported revenues rose 2.7% to £10.3bn while statutory profit before tax was up over 6% at £580m. However the sales growth was generated almost entirely by international (up 6%) and food (over 4%), while underlying profit before tax excluding accounting adjustments, restructuring and other one-off items fell almost 4% compared to the prior year.

Marks & Spencer claimed a return to growth for the year to 2015, with its first increase in underlying profits for four years. It was a pretty fragile recovery, nevertheless, fed almost entirely by its food business. Group revenues edged up a fraction to £10.31bn, and pretax profits clawed back 3% to £600m. However net profits (and therefore earnings per share) were still down as a result of a higher tax charge.

A host of charges for impairments, restructuring and other items dented performance for ye 2016. Net profits slipped 16% to £404.4m (£489m pretax). Group revenues edged up by less than 1% to £10.56bn.

More charges dented results for ye 2017, with revenues edging up by just 0.6% to £10.62bn. Net profits plunged by 71% to £116m (£176m pretax).

Management & Marketers

Sir Stuart Rose led the restructuring of Marks & Spencer between 2004 and 2010 as chief executive, and was knighted at the end of 2007 for his services to the retail industry. He took on the role of chairman as well in June 2008, replacing Lord Terry Burns. That appointment was met with concern by shareholders who argued in favour of a split role. A year later, Rose agreed to step down as CEO in 2010.

He was replaced as chief executive in May by Marc Bolland, poached from Morrisons. Rose remained chairman until January 2011, when he was succeeded by Robert Swannell, former vice chairman of Citigroup Europe. The arrival of Bolland led to a further shake-up when Ian Dyson, previously operations & finance director and passed over for the CEO role, announced his resignation. He was replaced as CFO by Alan Stewart. However Stewart also jumped ship in 2014 to join Tesco, and was in turn replaced by Helen Weir from John Lewis. The continuing decline of M&S's general merchandise division finally claimed Bolland's scalp at the beginning of 2016. He announced his decision to step down from April, to be succeeded by Steve Rowe, previously executive director, general merchandise. Chairman John Swannell stepped down towards the end of 2017, to be succeeded by former Asda leader and ITV chairman Archie Norman.

See Account Assignments for Marks & Spencer marketers


In 1884, Eastern European Jewish refugee Michael Marks set up a weekly stall in Kirkgate Market in the city of Leeds in Yorkshire, selling a variety of low-priced small goods. Unable at first to speak English, he mounted a sign on the stall which told customers, "Don't Ask The Price, It's A Penny". The business prospered, and Marks opened similar stalls in other cities. Ten years later, he moved to Manchester, opening a shop in partnership with Tom Spencer, the cashier for a local wholesaler. Selling a range of haberdashery, earthenware, hardware, household goods and stationery, the pair later opened more substantial premises in Leeds, Manchester and other cities. Spencer supplied the financial skill to back up Marks' tireless search for better quality goods at low prices.

By 1905 they ran 40 "penny bazaar" market stalls and 20 shops, and had each accumulated considerable wealth. But Spencer died in that year, followed by Marks two years later. Although the family continued to own the business, it was run by managers for the next ten years until Michael Marks' son Simon took control in 1916, assisted by his friend and later brother-in-law Israel Sieff. They set about expanding the fledgling empire further, gradually concentrating on clothing. In the 1920s, the company began a new policy, revolutionary for the time, of cutting out wholesalers and buying direct from retailers. The business flourished, going public in 1926.

In 1928, Marks & Spencer introduced the St Michael brandname for all the company's own-label goods. Reportedly the name was chosen partly in honour of the company's founder, and partly in imitation of another firm which sold its goods under the name St Margaret, after a nearby church. Marks & Spencer opened numerous outlets around the country, including a flagship store in London's Oxford Street. In 1931 the business began selling a small range of food items alongside its clothing. However Simon Marks reportedly hated the idea of being a grocer, and avoided developing this line. However with the shortage of textiles during World War II, there was little else to sell and the company effectively turned its shops into restaurants.

Post-war, clothing was reintroduced as the main line, and the group later became the first retailer to open its own research department to develop new textiles. Simon Marks died in 1964, and Sieff became company chairman, until he passed the role on to his son Marcus in 1972. By the 1970s, Marks & Spencer was established as the country's leading clothing retailer. The company also greatly expanded its food department, introducing the UK to pre-cooked meals, not just traditional European recipes, but also Indian and Chinese ready-made foods. A measure of Marks & Spencer's popularity was the fact that customers even coined their own slang term for the store, 'Marks & Sparks'. The precise origination of the phrase has never been explained, but it was already in wide usage by the mid-1960s. It has, for the most part, died out since 1990s, mainly after the group began to promote its own preferred abbreviation of "M&S".

In the 1970s the company took the momentous step of expanding overseas, acquiring three small Canadian retail chains and opening stores in Paris and Brussels. Following the success of its pre-cooked meals, Marks & Spencer started another small revolution in 1981, when it became the first retailer to begin selling ready-made packaged sandwiches. Despite the credit card boom of the 1980s, M&S made it a policy never to accept credit cards in its stores; however customers complained and the store introduced the M&S Chargecard in 1985. That year the first non-family member became the group's chairman. A year later Marks & Spencer moved tentatively into furniture, and in 1988 jumped into the US with the acquisition of upscale New York clothing retailer Brooks Brothers for $750m, as well as Kings Supermarkets. Later the group opened stores in Germany, Spain, eastern Europe and Asia.

By the mid-1990s, Marks & Spencer was firmly established as the favourite retailer of the affluent British middle classes, supplying a stylish range of everyday clothing. The company sold more than a third of the country's underwear, a quarter of all men's suits, one in 10 of all pairs of shoes. Its foods graced even the smartest of dinner parties, and it dominated the chilled ready-made meal sector with more than 50% share. In 1998 the group reported profits of almost £1.2bn, a record among European retailers. But gradually M&S's management team had grown lazy. Over-confident about the store's reputation and its position in the market, they failed to take notice of the increasingly aggressive retail sector. Inevitably sales growth began to slow as retailers such as Gap, Hennes and Next began to tempt away clothing customers; while Tesco and Asda stole share in the food sector.

Despite demands from investors that M&S should respond to these challenges, chairman & CEO Richard Greenbury chose to dismiss the turbulence of the market as a temporary fad. Eventually he was forced to split his job, but appointed handpicked protege Peter Salsbury as CEO. Profits continued to fall, forcing the group finally to take action. In 1999, the group closed its business in Canada, and ditched many of its UK clothing suppliers in favour of cheaper manufacturers in Asia. Greenbury and Salsbury both left the group that year and former Promodes boss Luc Vandevelde was appointed as chairman & CEO with a brief to save the business. Yet this was no small task: Marks & Spencer's profits had crumbled from £1.2bn to just £145m by 2001.

At the heart of the problem was the company's St Michael brandname, used for all clothing items. By the end of the 1990s, it was long-established as the UK's most widely bought apparel line. However as a result it was also perceived by customers as over-exposed and old-fashioned. With sales continuing to fall, the St Michael brand was dropped altogether in 2001. Instead the group overhauled its clothing lines, introducing new designers. George Davies, formerly of Next and Asda's George ranges, was hired to launch upscale women's line Per Una and Autograph for men. Footballer David Beckham was persuaded to lend his name to DB07, a range of clothes for younger teenage boys. In 2002, M&S acquired sportswear brand View From from former Olympic medallist Brendan Foster, marking a major break with tradition, its first ever external purchase of a clothing brand. Blue Harbour was launched as the group's main casual menswear range. At the same time, the entire foods range was overhauled, with the introduction of a wide variety of new meals and products, as well as a complete refurb of branding and packaging. In-store coffee shops were introduced in larger stores under the Cafe Revive brand. The group also began rolling out a chain of smaller Simply Foods outlets in urban centres, targeting office workers and commuters. Most controversially of all, the group launched its first ever advertising campaign. Previously Marks & Spencer had always refused to vulgarise its reputation with advertising.

Not all of these initiatives worked. Initially, the stores' new look and labels alienated existing shoppers without attracting new customers, while an advertising campaign which featured plump "normal-sized" naked women caused a storm over what constituted "normal" body size, and shocked some elements in the media for its nudity. Several old school members of the board, including its last remaining family representative Sir David Sieff resigned in protest. Gradually however the store began to find its level, reintroducing trusted elements from the old stores alongside the new innovations. A follow-up ad campaign went for tried and trusted celebrity endorsements in a bid to re-establish Marks & Spencer as everyone's favourite store.

There was still work to be done internationally. The group's wholly-owned but loss-making operations in continental Europe were sold or closed. The Spanish stores were sold to local giant El Corte Ingles in 2000; the French and Belgian outlets were marked for closure, but the announcement sparked bitter protest and court action from local unions. They were eventually sold instead to Galeries Lafayette. The chain of more than 200 Brooks Brothers stores in the US and Japan (only nominally profitable) were sold for less than a third of their purchase price to Retail Brand Alliance in 2001. A deal to sell US-based Kings Supermarkets collapsed in 2002 when buyer D'Agostino Supermarkets was unable to raise the $160m agreed sale price. Luc Vandevelde, who had masterminded M&S's initial recovery, stepped down as CEO in 2002, handing over to Roger Holmes, formerly managing director of UK Retail.

With a recovery in clothing and food apparently well under way by mid-2002, M&S began targeting housewares as a key growth sector for the future. At the end of 2002, Selfridges chief executive Vittorio Radice was headhunted to lead the company's expansion in home furnishings, and M&S opened its first specialist home furnishing stores in 2003. An expensive flagship store was opened in 2004 under the name Marks & Spencer Lifestore. Fashion designer George Davies was also commissioned to produce a new teenage clothing range. Yet this new strategy appeared to have thrown the group off-track once again. M&S was forced to report a worrying decline in sales of its core womenswear range over Christmas 2003. Sales of women's knitwear, coats and suits were said to have fallen by well over 10% year on year. In addition the Lifestore concept appeared to have been a substantial flop, attracting many visitors, but very few sales.

In May 2004, entrepreneur Philip Green, who has already successfully turned around two other high street giants Bhs and Arcadia, announced plans to bid for the struggling M&S. Anticipating a firm bid, M&S's board ousted chief executive Roger Holmes days later, and recruited experienced clothing retailer Stuart Rose, Arcadia's head at the time it was acquired by Green. He was considered to be one of the few businessmen tough enough to defend M&S from a hostile takeover and also turn the business around. Rose immediately launched a decisive overhaul of M&S management, as well as an aggressive counter-attack on Green, including a lawsuit which prevented his legal advisors for working on the takeover because they had previously worked for M&S. Green's initial conditional bid offered around £7bn in cash and shares for M&S, and was quickly rejected by M&S's board. Shareholders also were distinctly underwhelmed, suggesting that Green may have lost his opening advantage. A second bid, all-cash this time, and valuing M&S at around £8.3bn was also quickly rejected.

The battle looked set to get dirty soon afterwards. Few observers were surprised by press reports that Philip Green had already approached Stuart Rose about heading up a possible takeover bid for M&S before he announced his intentions publicly. More seriously, however, it was revealed that Rose had at around the same time acquired a large number of M&S shares, then trading well below the level they reached after Green's bid was announced. Rose claimed he hadn't been aware of Green's plans until five days after he bought the shares. But according to press reports, the purchase was made immediately after a long telephone conversation between Green and Rose. For a while this threatened to fall into the category of insider dealing, but Rose was eventually cleared of any wrongdoing by regulators.

Taking advantage of the distraction, Green launched what was considered by several observers to be a knock-out blow, an offer valuing the group at £9.1bn, backed by the support of M&S's largest institutional shareholder. That bid was also rejected by the M&S board, but the company's shareholders appeared to be divided over which offer to back. The position was unexpectedly resolved by Philip Green himself. Although he had accumulated support from a number of important shareholders, Green unexpectedly withdrew his offer in mid-July, citing the "rude" and arrogant behaviour of the M&S board in refusing to discuss a deal.

Stuart Rose unveiled his rescue plan for the group in July 2004, promising to refocus attention on the core market of women shoppers aged 35-55, to shut down the ambitious Lifestore project, and to sell the group's financial services division. (He also gave shareholders a cash incentive to back him, in the form of a bonus dividend payout). However it was also revealed that the Per Una fashion brand had hitherto belonged to George Davies, and was only being distributed exclusively by M&S. The store said it was now paying £125m to buy the brand from Davies. However the Per Una due teenage girls' range, DB07 Beckham brand and View From were all discontinued.

By May 2005, there was little good news to report as trading continued flat. Meanwhile, there was renewed conflict at board level, with some independent directors concerned about a lack of objectivity of the part of chairman Paul Myners, widely regarded as an ally of Stuart Rose. Myners stepped down in May 2005. Later that year there was a modest upturn in sales in the food division, although clothing sales remained flat. In October, George Davies abruptly announced his resignation after a row with Stuart Rose and announced plans to launch his own rival clothing business, GIV-e. A month later, the designer was back on-board at M&S again, having made peace with Rose. He left finally in November 2008.

Last full revision 26th October 2017

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