Marks And Spencer (LSE:MKS)
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From May 2019 to May 2024

U.K. retailer Marks & Spencer PLC (MKS.LN) presented its future growth strategy to investors Tuesday, focusing on improving its operations to save costs, expanding the options for customers to buy products - especially online - and driving its business outside of the U.K.

The U.K.'s biggest department store operator told attendees at an investor day that was webcast on its website that it would improve its supply chain and implement new IT systems which would save it GBP250 million by 2015/2016 through capital expenditure over the same period of GBP1 billion.

Some of those changes would include consolidating distribution sites which would mean further warehouse closures on top of the 21 already closed, sending products directly to the country of sale rather than routing everything through a central U.K. hub, and refreshing stock systems and data collection.

The second stage of the company's strategy, which it calls its 2020 program, is to offer more choice of when and how to buy M&S products, with online sales a particularly large growth area especially as more people turn to shopping on the Internet.

Store sales are expected to shrink slightly by 2020 to GBP206 billion from GBP212 billion this year, while online sales are expected to almost triple to GBP57 billion in 2020 from GBP21 billion this year according to research by Verdict, Forrester and Javelin Group provided by M&S at its investor day.

Marks & Spencer aims to target some of its 8 million customers who shop online elsewhere but not at M&S. There is also an untapped 21.5 million M&S customers who don't shop online at all.

The final plank in ITV's strategy is to grow its international business which currently accounts for 15% of M&S profits through 296 international stores and its online presence.

The growth is expected to come from increasing the group's central and eastern European operations as well as building on its business in China and India.

The company expects to open 50 stores in five years in India, and identify key regional growth areas in China where the company will focus on property, products and local sourcing.

Marks & Spencer unveiled its new strategy program under the banner "2020 Doing The Right Thing" in May, which received a lukewarm reception from investors. At the time, the retailer outlined its targets but gave few details on how exactly it would implement the plans. A bellwether for British consumer sentiment, Marks & Spencer has been hit hard over the past 18 months by the economic downturn as shoppers either cut back spending on nonessential items or sought less expensive food and clothing elsewhere. As a result, the company has revamped its food offer and availability and introduced a budget range of grocery products. It has also cut capital spending, laid off 1,230 staff and closed some stores.

At the start of the month, Marks & Spencer reported better-than-expected fiscal second-quarter sales, buoyed by the introduction of less expensive food and revamped clothing and houseware ranges. Still, it cautioned that business will remain difficult well into next year due to the economic downturn.

Second-quarter group sales rose 2.7%, due to a 9.6% rise in international sales and a 30% jump in online sales. The company also raised its outlook on annual profit margin thanks to better stock control, sourcing and supply chain management.

Company Web site: www.marksandspencer.com

-By Kathy Sandler, Dow Jones Newswires; 44-207-842-9293; kathy.sandler@dowjones.com