Hello, welcome to the Marks and Spencer 2023 AGM. I'm the chairman, I'm Archie Norman, I've been reading a book. It's entitled a well-worn, leather-bound book. It's entitled The Chairman's Reviews at Annual Meetings Since the Incorporation of the Company in 1926. This is a record of AGMs from 1926 to 1962. The reason I've been reading it is not just because, of course, those were the glory days for M&S, when we were a rapidly growing company, but also because those were the heydays of the great AGM, the days of popular shareholder democracy and we've set ourselves a target of trying to bring back the spirit of those days, the spirit of shareholder democracy. and, so, w e set ourselves a target today of getting 2,500 people to join us at this meeting live.
I don't know whether we'll achieve that, but I hope we have. I want to say a particular thank you to interactive investor, who've joined us in, on our Share Your Voice campaign for shareholder democracy and shared with us the contact details of their nominee shareholders, so we can talk to them directly. I hope some of them have been able to join our meeting. Welcome, all. A couple of words about this campaign, Share Your Voice. You know, what is it about? Well, look, I think it's as simple as saying we want to bring back shareholder democracy to the
We believe that a healthy country is one in which people feel they've got a stake in the business that employ people, that generate wealth, that pay taxes in our country and having a stake means that you can communicate with them, and the companies can communicate with the shareholders and w e feel that over the , instead of that, been sleepwalking into a situation where growing numbers of nominee shareholders don't even hear from their company and don't vote on AGM resolutions. They don't feel they have that stake. AGMs have become all too often, to be honest, some antiquated town hall events that are not accessible to people.
I mean, if you live and work in the north of England or Newcastle or Edinburgh, it's a big ask to, say, take a day off to come down to London, to queue up, to get into some hotel room, you know, to listen to an AGM. Often the AGMs are pretty dull and not really very welcoming and finally, we think annual reports are just too long, and to be honest, they're regulatory documents now. They're quite turgid, and I'm not saying they're not important, but they should be filed online, then we should talk to shareholders, giving them the communication they really need. Our annual report this year is 260 pages.
It's a wonderful document in every possible way, but I have to tell you, I think I and the audit partner from Deloitte and probably our very good finance director, Jeremy Townsend, are probably the only people who've read it, page to page. I'm not sure that's the way we should be talking to people in this modern era. We believe that government needs to act, and companies need to act to bring back shareholder democracy and a fter all, if companies like M&S don't stand up for the little person, for the small shareholder, then who will? Let's move on. A few words on M&S and what we're going to do today at our AGM.
In a moment, Stuart Machin, our Chief Executive, and Katie Bickerstaffe, our Co-Chief Executive, who works for Stuart, are going to talk about how they're doing on reshaping M&S and how much progress we've made in the last year. It really is an exciting time for the business. We'll come to the core of the AGM, which is going to be an open and transparent Q&A session. All questions are welcome. It really is an open field and presiding over the Q&A, we're welcoming back again this year, Anita Anand. Anita needs no introduction to most of you. She's a very well-known radio presenter and actually quite a well-known podcaster. She presents the PM program and any answers
on Radio 4. I can tell you now, she doesn't take prisoners. Her job is to hold us to account. The questions we select for the live meeting are of her choice. Then we're going to have the formal process and wrap up. First, a question for you from me. We're going to now hold a shareholder mood poll. This is to test how you feel about our company now. Then we'll ask the same question at the end and see whether we've moved on or whether we've gone backwards. The question which you will see on your screen is: Are you feeling more confident about your investment in M&S than you were this time last year? Are you feeling more confident than you were this time last year? You can vote now.
It's on a scale of one to 10, and you'll have another chance to vote at the end of the meeting, and we'll announce the result, and fingers crossed, we'll have made some progress. I'm speaking from our Waterside Support Center, where we hold our AGM, and this is our buzzing center. We have 2,000 or 3,000 people in here, hopefully buying things, developing products, talking to customers... I can tell you it's an unimaginably different place from four or five ago. It would have been quiet, there were offices everywhere, it was pretty slow. Now things have really moved forward, and that's important because our challenge has been to transform M&S.
I don't just mean the financial results, of course, they're the end product, but the way we work, the type of people we have, the way they interact at work every day, I now feel that the beating heart of M&S is really changing and going faster. We have a very strong team, a very high energy leadership team, but all through the business, commitment to the business is very strong. Product is improving. I hope you all feel that. Hopefully, you're enjoying our food and wearing our clothes. Our stores are changing. Some of you will have been to our new stores. They're performing very strongly, and they look very, very different from the old stores. Online is growing. We're becoming truly a technologically enabled omni-channel business.
Our objective is to be a growing company so that the shares can go up in value, we've decided not to pay a dividend for the last year, but we are going to pay a bit dividend next year, and that's so we can just conserve a bit more of our capital to invest in the company to modernize the business. It's also because we want to get back to investment grade. What this means is the rating agencies rate our bonds, and if they rate them a bit, for want of a better word, higher, then we pay less interest. That means more money to shareholders. That's why we've made this decision, but we are getting back to dividend paying next year, and hopefully, we can all look forward to a bit of a ka-ching in the pocket when that happens.
I believe this is an exciting time for Marks and Spencer, for our customers and our shareholders, and we want you to feel you can join us on that journey and see the progress, and hear from us throughout, and hold us to account. I do believe that when the results are strong, the chairman should say less. With that, I'm going to pipe down and hand you over to Stuart and Katie. Thank you.
Thank you, Archie, good morning, everyone from our busy renewal store here in London Colney. It's been a strong year despite the headwinds, as M&S invested in trusted value and did not pass on the full force of cost increases to customers. While this reduced gross margin, sales growth has been strong in both clothing and home and food, and we delivered profit before tax and adjusting items of GBP 482 million. It was a strong year for food. Sales grew 8.7%, with continued good growth in core categories such as fresh bakery and core grocery, reflecting our strategy to broaden our appeal. Grocery market share increased, M&S outperformed all major full-line supermarkets.
Over the last four , M&S Food has made a significant shift to trusted value, reducing the volume of promotions and becoming far more competitive, not just on quality, but on value price points. With the rising cost of living front of our customers' minds, we've invested again this year in value. We've sharpened the prices of over 100 Remarksable Value Lines, offering great everyday quality, but also great everyday prices, upholding the M&S quality point of difference. Remarksable Value sales were up 40%, and products featured in over 20% of our customer baskets. We also locked prices on 150 family favorites, giving our customers confidence in the quality, but also the everyday value on the products that they shop most.
We reinvigorated our iconic dine-in offer with new deals, such as our steak dine-in for two, and we moved our dine-in proposition to Always On, providing permanent, affordable, better-than-restaurant quality alternatives to eating out. Exceptional product is at the very heart of M&S. We are a product organization. M&S Food has won over 200 tried and tested awards, from our Fairtrade coffee to our handcrafted sausage rolls, and we were named Good Housekeeping's Wine Retailer of the Year. Customers are noticing and responding to our investment in quality and our investment in everyday trusted value. Value perception is now at its highest in 6 years, and we've maintained our leading position in quality and sustainability. I'm really pleased to report that it was also a strong year for our clothing and home business, with sales up 11.5%.
Importantly, full price sell-through held steady on last year, and market share has increased. Store sales were particularly strong, but online sales were also up. This was driven by the M&S app and strong demand for Click & Collect. Over recent years, we have cut the numbers of lines to create a more focused and edited clothing range. This action has enabled us to buy more deeply into core categories. For example, women's denim, the department I'm standing in now, sales have grown over several years, extending our industry-leading market share to above 13%. A more focused offer has also allowed us to buy more confidently into areas that drive our style and style perception. Dresses are a standout example. 3 years ago, our market position was sixth, and M&S now holds the third spot.
Our performance has been achieved by an overhaul of our pricing architecture, modernizing our designs with forward-looking prints, and taking a more confident trading approach, with more open to buys, allowing us to test demand and use shorter lead time routes to replenish stock. Casual dresses were up 40% last year. Our leading position in value, quality, and sustainability has been maintained, the really encouraging news for our clothing business is that style perception has now moved up several places to take third position. It's been a good result in both food and Clothing & Home. Katie will now pick up a really important part of our strategy, which is omni-channel, I've asked Katie to also include Ocado in this update.
Thanks, Stuart. Good morning from me at our White City store. We've talked to you about the opportunity we have to increase digital engagement, online sales, and profitability through our work on omni-channel. Our goal is to increase customer frequency and spend by leveraging our national store and distribution network to offer a more convenient and consistent service. We know customers who shop multiple channels and products typically spend more and more frequently. An effective and profitable way to serve them is through our M&S app. The use of the app and associated Sparks memberships continues to grow, with our active app users increasing 40% to GBP 4.3 million. Our app aims to provide personalized shop front to M&S brand and Sparks for our customers and connect the store and online world with added value services.
It's been a great year for online sales, with sales increasing 4.8%, supported by our Click & Collect growth of over 20%. Even better, more than 1/3 of our sales are now through our app, compared with only 26% last year. We think building the best omni-channel offer includes a curated selection of complementary third-party brands. We now have over 140 partners, increasing relevance in categories where brands matter to customers, such as dresses, footwear, sports, and outerwear. Branded sales have increased 67%, these now represent about 8% of our total online sales. Launches have included an extended sports offer through The Sports Edit and Clinique and Benefit in our beauty categories. Our branded offer is attracting new shoppers and incremental spend, which otherwise would have gone to our competitors.
Importantly, a large number of customer baskets also include M&S products. You'll remember we invested in the Ocado Retail business to bring the best together, combining the strengths of Marks and Spencer's brand, food quality, and innovation with Ocado's unique and proprietary technology. The joint venture has already generated volume growth and buying benefits for M&S Food, with over GBP 600 million of sales through Ocado in the last year. Ocado Retail's revenue in the year was slightly down, although Marks and Spencer's share of that revenue has increased. While active customers grew, revenues reflected reduced volumes due to lower shopping frequency post the pandemic and the impact of cost inflation on customers' baskets. However, Ocado Retail has grown by 40% since the M&S investment and has a large addressable market and substantial invested capacity for growth.
This will enable it to grow sales and recover profitability in the medium term. International sales increased over 12%, growing ahead of partner retail sales, driven by Clothing & Home, as partners restocked following the emergence from COVID. This was a good performance, considering the impact of exiting markets such as Russia during the year. Online sales were up and are now more than double our pre-COVID levels and account for almost a quarter of international Clothing & Home sales. That's it for me here in White City store, and I'll hand you back to Stuart.
One of my first actions as chief executive was to create a culture which is closer to our colleagues, closer to our customers. That means being closer to our store operations. As part of this, I reintroduced a CEO suggestion scheme, so every colleague could come straight to me, we call it Straight to Stuart, with any idea that they have to improve M&S. In just this first 12 months, I've received over 10,000 different suggestions from our colleagues. Our new Closer to Customer program also requires every single colleague in our store support center to spend a minimum of 7 days a year working in a store. Accelerating store rotation and renewal makes customers think differently about M&S and builds an estate fit for the future.
A brilliant example of this is Chesterfield store, where we closed the High Street store and shifted to the former Debenhams unit on the retail park. The new store environment speaks for itself, and customers are noticing and loving the difference. The store is on track to double the sales from the former store, and payback of the capital invested is under 4 years. As we enter the new financial year, we're accelerating the program, with eight new full-line stores and 10 new food stores. This includes five brand-defining stores in Liverpool, Leeds, Manchester, Birmingham, and Thurrock Lakeside. It's a significant investment by M&S, and we expect payback of around 3 years. The full food renewal format delivers a bigger, better, fresher, more inspiring store experience, which also creates opportunities for a larger family shop.
In summary, one year on as chief executive, our plans to reshape M&S are beginning to drive improved performance, and customers are noticing the difference. In our food business, we've consolidated our reputation for great quality and great taste, but we're now also being recognized for great value. Our style credentials in clothing are starting to catch up with our leading value and quality position. Our emerging strength in omni-channel means we're beginning to offer an easier and more inspiring shop through our renewal stores, through app, through Sparks, through M&S.com, and of course, through Ocado Retail. Looking ahead, of course, the outlook always remains slightly uncertain. We are in the early weeks of this trading year, and trading is on track, and both our businesses are showing good growth. Much is in our control for the year ahead.
M&S is such a special business with so much potential. I'm excited about what we can achieve in the year ahead, building on the strong foundations we've established this year.
Well, hello, everybody, now we're live in Waterside for the most important part of the AGM, which is the questions and answers, the point at which you put your opinions or your questions to the executive team. Before we do that, I wanted to give you the answer to the question I asked you, which is whether you all feel more confident about the future of M&S than you did a year ago. The outcome of the, let's call it a mood poll, it was six out of 10. Positive, but probably room for improvement, and we're going to ask the same question at the end of the Q&A session just to see whether the dial has moved at all. So, let's see what happens.
Now, I'm just going to go to the introductions, starting with our executive leadership team, Stuart Machin, our Chief Executive, who obviously you all know and you've just heard from, and Katie Bickerstaffe, our Co-Chief Executive, and Jeremy Townsend, who's our Finance Director, who's making his debut appearance.
[audio distortion]
-as an M&S AGM. Welcome, Jeremy.
Most importantly, I wanted to welcome back Anita Anand, who's going to be our shareholder advocate again this year, and will put your questions to us. Anita, do you want to say a few words?
Sure. Archie, thank you very much indeed. Good morning to all shareholders joining us today. My name is Anita Anand, I am very happy to have been asked back again this year to be your advocate right here in the room. I'm gonna be putting your questions to the board. Rest assured, I am going to make sure you get answers, we've had so many questions come through already, submitted by you. I've been through all of them. Some are along pretty similar lines, to make sure we get into everything that you've raised, I'm gonna start sort of mooshing, if you like, questions together. You may not hear your name, rest assured, we will be covering what I can see are the most important issues on your mind today.
Do remember, you can continue to post live questions through the platform that you're viewing on. Back to you, Archie.
Thank you, Anita. I just want to introduce the board. The board are with us, live. They're not all sitting around this room, because it wouldn't be possible to see them all but I'm not going to introduce them name by name, because it would take too much time out of the shareholders' question time. What I did want to do was to introduce particularly two new board members, Ronan Dunne and Cheryl Potter, and they've been kind enough to record an introductory video so that they can tell you who they are.
Hello, I'm Ronan Dunne, and I'm proud to be a non-executive director here at Marks and Spencer. My background is I'm an accountant by profession and a banker, but have spent the last 20+ years working in the telecoms industry, where I focused on brand, customer experience, and really adopting technology for the benefit of great consumer experiences. In a way, that's what I think I bring to Marks and Spencer, that insight of dealing directly with consumer customers, both here in the U.K. and also overseas in the United States, and really that focus on delivering incredible customer experiences, which is at the heart of the Marks and Spencer brand. I think that the thing that particularly attracted me to Marks and Spencer was just the credibility and resonance that the brand has.
Having had the privilege of working in other great branded businesses, I recognized in Marks and Spencer, a brand that really stands for something. It stands for quality, it stands for value, and it also stands for innovation. For me, I have a very simple favorite when it comes to M&S. I have a 29-year-old daughter, who, for 29 years in a row, has celebrated her birthday with a Colin the Caterpillar cake.
Hi there, I'm Cheryl Potter. I'm the newest addition to the Marks and Spencer board. I've joined, having spent 20 years in the private equity industry at Permira, where I ran our consumer team. I bring a wealth of consumer investing experience into food retail, branded apparel retail across physical stores, omni-channel businesses, and pure play. I hope to bring to Marks and Spencer a passion for stakeholder value, whether that's our colleagues, our customers, or you, our investors. I've spent 20 years working through incredibly talented management teams to support them in delivering fantastic outcomes. That's one of the things that I would hope to bring to Marks and Spencer. I have a real passion for diversity.
I chair an organization called Level20, focused on getting more senior women into investing roles, and I would like to work with the Marks and Spencer team to continue, you know, their market-leading position in terms of being a diverse employer. Why did I come to Marks? Why would you not come to Marks and Spencer? It's the most loved brand on the High Street. It's got an amazing heritage. It's clearly going through a transformation at the moment where we can build on what made this an amazing business in the past, to continue to enable it to be an amazing business in the future. My favorite product, goes without saying, is Colin the Caterpillar. Everybody in my family ever has had a Colin the Caterpillar cake, because I never, ever bake.
Thank you, Cheryl, and thank you, Ronan, and thank you to all the board for joining us, but also for the shift you put in during the course of the year. That's it from point of instructions, and without further ado, over to you, Anita.
Actually, thanks very much. Before we delve into the main body of today's Q&A, while we're collating more of your questions, let's get some views in the room on some of the themes that I've seen coming through loud and clear and Stuart, if I can start with you in that film introduction that you did. Inflation, cost of living, they have never been out of the headlines of late.
Mm-hmm.
You have predicted there are more headwinds coming our way. How are you going to navigate those waters when thinking about the margins as well for shareholders?
No, it's a very important question. I know I touched on this on the video, so our shareholders are pretty up to date on it. I think I'll start with saying, actually, I joined Marks and Spencer 5 years ago. Everything I read about our heritage in every book in the archive center in Leeds, people I spoke to, they talked about. Actually, Ronan said this on the video, quality, value, innovation. I think the brand got confused when it went too premium. Therefore, we have set about in food and in clothing and home over the last few years to improve our value for customers. We sort of have a saying: If you look after customers, you'll look after shareholders. This year has been quite unprecedented.
I've never known such a challenging year when it comes to inflation. Inflation that we've been having, we've invested in colleague pay, GBP 100 million over the last 2 years. Then, of course, our suppliers, in particular in food, have had their headwinds that gets passed on to us. Energy inflation, wage inflation, and commodity price increases. Therefore, I kept quite close to our buying teams over this last 12 months, and it really reinforced our buyers had a very different job last year. Instead of looking at innovation and quality and new ranges and getting ready for summer or Christmas, they were actually spending a lot of their time just having incoming calls, requesting COGS, cost of goods, increases. Managing that in the hundreds of millions of GBP was incredibly time-consuming.
Quite actually put the buying team under quite a bit of pressure, because how do you manage all of this inflation from your supply base and the inflation we're having within our organization and at the same time, the P&L is in all the products you sell. We know if we passed all of that on as quick as it was coming to us, actually, the customer would definitely feel that. We've been outperforming the market, especially in food, for the last 4.5 years in value sales and volume sales, and we didn't want to go backwards and o ur shareholders will remember this, but at the half-year results, it was quite a tricky set of results for food because we outperformed the market, but our margin was down.
We believed very strongly, and I believed strongly, that if we held our nerve and we got more cost out of our business to fund some of that inflation, then we would have a good Christmas and have a good year, and it would set us up for the year ahead as well.
Okay.
That's really what happened. I should just call out the food team because it was on the video, Anita, the remarkable program of 100 items that we do have better quality, we benchmark the big supermarkets on price. We kept our shape on that, on the Locked lines, a campaign that the team came up with to give that trusted value, was around 150 items people buy most and I use this word tricksy. I'm quite anti-promotions. Every time we do a promotion, I say, "Why? Wasn't the price good enough?" Actually, what the team did is give customers a trusted position of saying, "We've locked these items for 6 months. You don't have to worry.
This is the price, and you can trust us for this period of time." The summary of that meant we invested in our food margin by 130 basis points, but we grew our sales overall and tried to protect that cash as best we could. I think that has given us a good start, by the way, into this year. Just my last thing, I'm slightly worried about deflation because it's not gonna come down as quick as the inflation, and now we're tracking that really carefully and try to pass that on as well to customers.
Okay, I mean, there's so many questions coming to mind, but it's not about my questions, it's about shareholder questions. We're gonna come to those in a moment. Katie, though, just very briefly, again, from your film, you were talking about becoming the leading omni-channel retailer, growing online in food, online in clothes and home goods. I just wonder whether the landscape has changed a bit now. You know, we are now post-COVID, and Marks and Spencer's customers, they like to feel things, touch things, go into physical stores. Have you not had to recalibrate a little bit?
It's a really good question, Anita, thank you. I mean, there are a couple of things that happened post-COVID. First of all, a lot of people working from home, a lot of people have been shopping digitally for sort of 12, 18 months because they've had to, there's definitely been a resurgence in terms of store footfall. We're very grateful to benefit from that, it's driven very strong performance in our store estate. Actually, those customers are also shopping digitally. Pre-COVID, we saw on average per year, a 2%-3% sales increase in terms of the migration towards digital. Over the medium term, we expect that growth to continue.
I actually think it's very important that we grow both and that we continue to invest in both our fantastic store estate that Stuart alluded to in the video. We've got some remarkable stores launching this year, but also both in terms of the digital experience through the app, through our stores, and continue to invest in that and to grow that. A couple of examples of that we've been working through, clearly, our app and the penetration of our digital sales on our app. So, currently, about 40% of our .com sales now are driven through the app, which is fantastic, and we'll continue to innovate within that stream. The second is actually using the stores to fulfill our orders. A significant proportion of our store orders are Click & Collect.
250 stores have screens that you press to get Click & Collect, We try and fulfill those orders for customers once they arrive at the screen in under 60 seconds, I think last week, we were at 45 seconds. For me, it's using both, I will continue to push the business very, very hard to grow our digital innovation and our digital credentials.
Okay, Katie, thank you very much.
Thank you.
I can see we've got more questions coming in from our shareholders. Let's move on to those now, because it is the most important part of today. Archie, this is to you. It's been asked by many people today through these channels and also privately. I've been asked as well, because when people knew I was, I was doing this this year. I'm gonna sum it up in Cliff Weight's words of ShareSoc. He has said, "Archie Norman's campaign for shareholder democracy has merits, but he's gone too far, too fast on the question of AGMs." Can you explain why M&S will not be allowing shareholders to attend AGMs? I think some papers have put it as buttonholed by shareholders.
That's right, yeah. Well, thank you, Anita, and, probably not the first time in my career I've been accused of going too far, too fast. Well, look, it is a topical question. We have heard the feedback, and we're thinking about it. Just a bit of context, our objective is to have the biggest shareholder AGM in the country, and we think we're on track to doing that. I don't know how many people have been able to join us today, but I think it'll be a lot. On average, since the pandemic, when everybody started trialing digital and hybrid type of AGMs, on average, AGMs of large British companies have seen a drop in attendance about 20%- 25%.
Our AGM last year was roughly 2.5x-3x the attendance that we had prior to the pandemic. We think we've achieved something with that. We've created this successful AGM, enables people to join us from all around the country, even if they're time poor, even if they can't travel. That's an achievement. The question now, which the board are going to have to think about, given the feedback we've had, and just by the way, there are some brave shareholders being kind enough to come and join us today, and they're in the room with us now. The question that I know people are asking is, "Look, why can't I come along physically and look the chairman eye to eye and buttonhole him?" I don't think that's unreasonable. We are accessible in the year.
We hold shareholder panels, but at the AGM, but, is there some way we can combine the reach of the digital AGM, which we've got now, with the personality, the liveliness of having people physically present in the room? We are going to have to think about that.
That sounds to me like the door is open and next year it may look a little different.
I'm sure it's a little different. You know, we are on a journey, as they say here. We know we haven't got to the end point. We are going to have to think about how we make this, get the best of both worlds we possibly can.
Okay, all right. Another question. Now, 12 shareholders plus have asked this question, including Tom Aird, Anne Rogerson, Mary Fitzgerald, Ackram McCullough. Why was the choice made to pay a very generous bonus before paying a dividend? When will a dividend be paid to shareholders once again?
Well, I've commented on this earlier, I'm actually going to give Jeremy a chance to comment.
Lucky Jeremy.
on the dividend. Exactly. The only thing I made a slightly headmasterly comment. I don't think we should conflate bonuses and dividend as such. I mean, look, people worked incredibly hard. The business has outperformed most people's expectations. We've grown market share. We've delivered a lot of change in the business. Store managers and colleagues across the business, I think, deserve a bonus for that. Incidentally, most of that, a lot of that bonus is deferred, so they don't get cash in year. It's not as simple as that. I think that's the right thing to do. The dividend question is about whether we got enough capital for growth, capital to invest, and whether the balance sheet is in the right condition. Just as to remember, look, share price goes up and down. It's happened in the last year that the share price has...
Last 18 months, share price has nearly doubled. It's not as if shareholders haven't had some benefit from all the achievement. Jeremy, tell us about the dividend.
Thanks, Archie.
What are you offering?
We clearly appreciate dividends are very important to shareholders. As you said in the introduction, as Stuart pointed out in his section, we've got some really exciting investments to make in our stores, in our supply chain, in digital with our customers, as Katie said. We need to prioritize those. As you said, we're committed to an investment grade credit rating because that helps reduce our interest costs and is good for our balance sheet. A dividend, I think, is a key way of demonstrating our confidence in the business, as Stuart said, we've had a good start to the year. We are confident about trading, at the half year, we do plan to announce a return to dividend payments with a modest dividend, reflecting how important it is to shareholders.
Okay, we asked for some for shareholders, if they wanted to submit a video question. We have one of those now. It's from Richard Schaefer, and I believe it's on driving change and performance.
The pandemic and cost of living crisis created a need to react. How do you create a sense of constant stress to drive further change?
Please take him that one.
Well-[crosstalk]
Well, I'm gonna throw it first to Archie, [crosstalk]
Favourite question of constant stress.
Mm.
It's definitely not one for the Chairman. Look, I think you can get good stress and bad stress and. Stuart, do you want to? This is a leadership question.
I'm conscious of my 360 feedback recently that said, "You need to celebrate more and not be so dissatisfied every day." Look, I think there's one thing that came through on that question. Through the pandemic, the one thing we did do, which I actually look back and think it was a great thing to do, we called it Never the Same Again. It actually was about how do we accelerate change? I use this all the time. In fact, my colleagues to my left will remember this, but when we did our full year results, we did the analyst call, we did the media call, and afterwards, I got quite fidgety.
I was thinking, "Well, this is all a bit too good." I went down to Richard in the clothing team and said, "Richard, how ambitious really are we?" We sat with the clothing team for 10 minutes, 15 minutes, had this discussion on the next 3 years. Then I went to the food team, and Alex was already waiting because I think Richard had texted him and said, "Stuart's on the way round." I said to Alex, "It's good, but we've got a lot to do." Alex is our new food MD, and he's really just getting into the rhythm of how we're going to double this food business.
Sacha was already waiting for me on the property floor, and I said, "Are we really accelerating this property plan?" The reason I say that, in all seriousness, is what I love about us as a team is we're constantly striving to do better. It's a bit of an old saying that many people use, but it's pretty relentless, and that's why I enjoy the role. I quite enjoy the fact that I think I call it positively dissatisfied, but I actually quite like the fact we are. We've got lots to do. I use this saying quite a bit now. It was actually one of our board who always challenge us, hold us to account, but are always there to listen.
One of our board said to me, they heard a saying, I've stolen it with pride every day, "Lots done and lots achieved, lots to do, lots to lose." We're slightly paranoid about that. If it's stress, it's healthy stress.
Right. Okay, good. I'm taking positively dissatisfied home to use on the family. We've got one question that's just come in from an Interactive Investor platform this morning. This shareholder wants to know: I understand there's been a real focus on Sparks and how customer incentives ensure repeat visits. Can you shed some light on how the Sparks Plus trial performed, and whether this is likely to become a permanent offering?
first, it's great to hear from somebody from Interactive Investor, the Interactive Investor platform. thank you for joining us. Sparks, massive program. Katie, you've led on this.
[audio distortion]
Of course. Thank you very much for the question. Over the last couple of years, we've done a couple of things with Sparks. The first thing is that we've driven it to become a digital-first program. The very best experience that you get for Sparks is in the app. That includes offers and direct communications as you pull up near a store, for instance, if you have your phone with you. It also allows us to do much more personalized offers and experiences, which is very important. When we started to think about what we wanted Sparks to be, what we wanted it to be was to give you the very, very, very best of Marks and Spencer's when you're our Sparks customers.
What we do is we constantly innovate and trial things, and Sparks Plus was one of the things that we innovated with. Sparks Plus was effectively access to quick next-day delivery and other things within the Sparks world for a small payment fee on a monthly basis. It resonated very, very strongly with customers. We trialed it with a very small cohort of customers, and we will do more trial activity with those cohorts of customers over the next 6 to 12 months. One of the things, and Stuart was talking about us being sort of positively dissatisfied, one of the great things about this business and one of the great things about Sparks, actually, and digital capability, is that we can constantly A/B test things.
Mm.
Put things in front of consumers. We do it when we're thinking about product. You saw in the video, we do it when we're thinking about new offers and new services, put it in front of customers. They basically tell us really, really quickly, sort of within 24 hours, what they think of it. We measure all of that. It enables us to go again, double down on the things that work. Then kind of stop the things that don't work so quickly. Lots more to do within Sparks. You'll see lots more innovation coming.
Okay.
Thank you.
Another question. I'm going to try and rattle through as many of these as we can.
Sure
... the shareholders as much bang for their buck. Christopher Taylor has been in touch. It's about Ocado. When will we expect a proper return from Ocado Retail based on the price paid, 50% using shareholder funds?
Well, Anita, you gave us a bit of feedback on Ocado before the meeting.
I did.
And Ocado asked about-
I said, yes, I absolutely. Shall I share? Sometimes stuff doesn't come through.
Availability.
Yeah.
On availability.
Right.
Look, I, firstly, we strongly believe in the future of Ocado. We think it's the right model for M&S online. For us, we've already got something out of it, because we are online, and we couldn't be otherwise, and we've got some return from supplying Ocado Retail, but we're not happy with where it is. Joint ventures are hard, that has to be right, but also online food is hard. We've got work to do. Stuart, you've led on this. Do you want to?
Yes, I mean, I think it is a good question. I think the first thing just to mention, is we laid out the synergies that we would get by selling M&S volume through Ocado. That has been achieved. In fact, last year, we quite relied heavily on those synergies because with all of the inflation coming through and how to balance it all, it was quite challenging. To some extent, we actually got what we wanted to get from it in terms of those annual synergy savings. The potential, I think, is pretty huge. I mean, Archie has articulated it well. In fact, we spoke about it yesterday, last night, in our weekly catch up, because we've just had the Ocado away day, and it's the Ocado board with the new management team, and there's a complete reset.
Despite not much effort, M&S is 26% of the Ocado sales, and it's gone well without actually putting a lot of effort in. Therefore, the reason I say that is if you think, and our shareholders that shop Ocado, and you will know this 'cause we spoke about it earlier, I get quite frustrated if I see an advert and an M&S product isn't there. I wear two hats. I want Ocado to be incredibly successful because we have 50% of it, but I want M&S to be even more incredibly successful on Ocado. If I see an advert or an email and M&S isn't featured, or a classic example the other week, Sharry, our brilliant marketing director in food, sent out a customer email with new products and also featured, you can get them on Ocado.
On that Saturday afternoon, I click, and I go straight onto the Ocado website and find three out of the four not available. Hence, the emails get flying around all weekend. Why are these products not available? There's lots to do. Just to summarize some things that are happening, Alex, who runs our food business, and Hannah, the new Chief Executive, I think, are working very well. Already there's 700 more M&S products gone onto the Ocado website. I was thrilled to see the 145 veg oil on the other day, for example, a real basic item that wasn't ranged before. The ranging is getting better. The second thing is, M&S have a role to play in this as well as Ocado. We have to get the availability better.
In fact, my guidance on the away day, if you sort availability out, you maintain the service, and you really do make sure the M&S products are the same price as the store price. If we achieve those three things, Hannah, this year, you would have done a pretty good job. There's lots to do, but we need to just focus on the few. I'm really excited. You have to remember, M&S Food wasn't online, and M&S Food wasn't really in large stores of 15,000 or 20,000 sq ft 5 years ago. We were convenience, we were small stores, and we kept thinking: How are we going to drive growth in this business over the medium to long term? We're driving growth through large stores, and we can drive growth through Ocado.
I'm incredibly challenging on the team on my expectations, not really this year, because I really want Hannah to find her feet, do the right thing, and medium to long term, I think we'll be looking back and saying, this is a great online business for M&S.
Okay. Okay, this is sort of slightly related. It's a food question. It's from Alan Hakim. He says: Look, I'm concerned that M&S Made Without, the range is being decreased, apparently to make more space for vegan products. Alan says, "This is the wrong approach, having achieved regular stocking of our preferred items at my local Haven branch, but only when I attended an AGM in person and I spoke to senior management, they're now disappearing again. If you need more shelf space for vegan products, get it from regular shelves, not from the Made Without.
I'm interested that Alan said that because I didn't realize we were doing that.
Nor did I. But let me pick up Haven, Alan, separately. I think there is an availability issue on some of these products. I was in stores this weekend, and I know I had about six photos that I sent the team on availability. Look, space, I don't know what we've done on the vegan, but I would go and find out. There isn't a plan to reduce Made Without and give more to vegan. We do have high share of vegan food. Plant Kitchen is a very well-known brand. In fact, it's not just about vegan, it's more about giving healthier and different choices, and we only have so much space. I don't think we've taken it away.
I think we have about 125 to 130 Made Without products, and actually, they're very, very good products, and some of those are also featured in the categories. I would take it away because that isn't the plan today.
Okay.
I will check Haven by this afternoon.
Okay. Okay, well, great. This is another one on food. Actually, this is food is a real issue with shareholders. It is by Scott D'Cunha, who says: How much growth do we still believe is available for the food division today? And how will we maximize the opportunity?
Well, we only have roughly 3.5% market share in food, so we're quite small, and given the growth we're planning, which Stuart can talk about, we think there's, I wouldn't say open road ahead, because it's a very competitive market, but there's lots of scope if we get it right.
I mean, I think the first answer is we want to grow both our businesses and therefore M&S, and our focus on growth is very serious. We're very ambitious for Marks and Spencer, and we laid out at the Capital Markets Day, Katie and myself. This year, Jeremy will join us, and between us three and our leadership team, we've set out a three-year plan and a five-year vision already. There's some ambition in that plan, but probably 80% achievable, and that's clothing, home, and food. In food specifically, we think we can grow our market share by 1%. That really means doubling the size of our business. Most shareholders will probably know that when I joined 5 years ago, I said we need to double this business.
We've added GBP 2 billion of sales, but we haven't added GBP 5 billion, so we've got a way to go, but I think it's really doable. The food margins are always thin. It goes back to the first question you asked from our shareholders about inflation. I mean, our food margins are, like, 3.5%, so you need scale, you need volume, and that's where we focus. Like I said, through the larger stores, we've got 10 new food stores this year opening and eight fantastic four-line stores. They're bigger stores. We will never be as big as a supermarket, and we're quite conscious of this, and it's an important point because I actually don't want us to...
I say to the team, we went to a store over the weekend, and I said, "You're not running M&S for 5 years, we run M&S for a lifetime." I don't want to come back in a lifetime and say: Why did we open this big shop? We're very careful about format, size, and space on clothing and food. The maximum food store will be about 25,000 sq ft, so not as big as a big supermarket, and it will be own label, 99%. Through those 10 stores, through eight four-line flagship stores, which includes Clothing and Home, and through Ocado and natural like-for-like growth, we think we've got a big opportunity, and I think Alex and the leadership team in food have really got the bit between their teeth.
Okay, Barry Hyman's been in touch. Barry says, In the late sixties, we decided to use our big, white, anonymous food delivery lorries for PR. We painted Marks and Spencer's on them, now-
Mm.
we own Gist. Why aren't we doing the same?
Well, Barry is a good friend of M&S, and he knows all about the business. Thank you, Barry, for the question. It's a good one. What he's referring to is those lorries you see going up and down the country. They're typically white with a big Gist sign on the sign, on the side. Gist is now a part of our family because we bought it just over a year ago. The question is, why can't we say something more motivating on the side of our lorries?
Well, Barry's right. I mean, sometimes if I'm down the motorway, I end up picking up a lorry that might not be clean and then sending an email to say, "The lorry is dirty." There has been occasions with Ocado vans, I've talked to Hannah and said: Can we have M&S a bit more prominent on Ocado? The answer, Barry, very quickly is, I can't remember how many, but I think it's 1,400 lorries. Am I right on that? I don't know. I think we roughly have 1,400 lorries. Half of those have M&S branding. As we rotate the fleet and we get new ones, we will put M&S branding on them. It would take a couple of years because it's quite a lot of money. As we replace, we'll update. It's top of mind because we like the branding.
Sure.
as you go down the motorway.
Okay, all right. Ralph Walker, sustainability. That's a good question. When is M&S going to just stop using plastic bags?
Yeah, this is a very interesting question. It's more complicated than people think, because the popular idea now is, you know, paper good, plastic bad, bag. We know what people are concerned about with the plastic, they're floating around the environment, non-biodegradable, et cetera. In fact, when you look at the science of it, the picture is slightly different and more complicated. We always try on sustainability, ultimately, to do the right thing. No, it's not just a popular vote. We're trying to do the right thing for the environment. To explain that rather complicated question.
Me again.
Stuart or Katie.
I'll answer it quite quickly. I think Archie said it. I mean, plastic is top of mind. I mean, sometimes we can convince ourselves that it's sometimes good. We took plastic out of some of our food products, those chicken nuggets.
Mm.
For example. On occasions, when I'm walking the stores and I find packaging problems, or actually on Ocado, customers write, I love Ocado for this, you get marked. I look at the, I'm addicted to the Ocado website.
Mm.
where you read the comments, a bit like I'm addicted to our community internally, where the colleagues write. On a late night, you can read everything and find everything out. A lot of our packaging, where we removed the plastic, actually caused us some quality problems. It's not a reason or an excuse, and it's not about carrier bags, but we do have to be careful on how we remove our plastic and how we keep, maintain the quality and protect the product. We've reduced about 75 million pieces of plastic out of our food business in the last few years. We were the first retailer, I think in 2008 or 2009, to go to reduce the single-use plastic bag. Actually, our plastic bag sales are down 90%, so we're on the journey.
I do think at some point we will be saying there's no plastic bags. When? I can't confirm, but I think at some point in the journey, we will be saying that.
Okay, some point on the journey. Okay, another sustainability question. Elizabeth Parker has been in touch. Labour Behind the Label, and I believe that's a, a pressure group, reported crisis for Pakistani garment workers. What is M&S doing to ensure that workers in its supply chain are not being exploited?
You know, this is one of the questions that keeps the board awake at night. We're sourcing clothing from around the world, including countries where labor conditions aren't the same as the UK, and you're always worried that perhaps through some oversight, we've ended up working with a factory where conditions really aren't right. We do a lot to try and manage this, but [audio distortion]
We take this very seriously. We pride ourselves on ethical trading. We have a series of standards that we expect when we're sourcing globally from all of our suppliers and our partners. We sign agreements with them that are not just about clearly the quality, the provenance of the product, manufacturing targets, et cetera, but are very strongly related to the way that the product is manufactured, the way that colleagues are treated and looked after. We do audits, we do regular audits, we do investigations, we do unprompted visits. There are a series of things that we do. We also have our sourcing, our head of sourcing works directly for Richard Price in Clothing & Home. She has a team in multiple markets who know those markets very, very well.
It's not people just coming from the U.K. to have a look. There are also people out in those markets who can make sure that everything is done properly and effectively. These kind of smooth audit processes are very, very important, and we review the outputs of those audits on a regular basis to make sure that we're all over it, and making sure that we're sourcing from the right places.
Okay, Katie, Thank you.
Thank you.
This is from Barbara Kale, Ian Metcalfe has asked something similar. Again, I'm going to do this smushy thing. M&S clothing quality is often poor. Are you ever going to go back to selling good quality clothes again?
Well, it's a pretty direct question. obviously, We think we've made great strides. I don't want to sound as if we think we got to the end point, but I'm convinced we've made great strides, and all our feedback is positive. Been to that effect, and the market share, and the sales figures, they're saying.
Who wants to, Katie, do you want to?
[audio distortion]
Hit this one directly?
I think, I mean, there are just a couple of things to say, and Barbara and Ian, if you have specific issues around products that you've bought from us, please do get in touch with me, because customer feedback on this is extremely important. We've worked very hard to improve our quality standards. As you know, we take a lot of our data in clothing and home from a YouGov poll. Currently, we are number one for quality. Our quality rating's gone up actually a percentage point over the last 12 months, which is very, very important. It doesn't mean we get it right all of the time. I'm very, very mindful of that.
Something that Stuart and I say a lot is, "If ever you're in doubt, you invest in quality." I think that mantra resonates very, very strongly through the team. We test all our products. We look at all our products for the finish on the seam, for the wash, for whether or not there's any sort of balling. We test the machine proof in terms of washing machine/tumble dryer, and we invest quite a lot in our technical team. We have a technical team in food-
Yeah
... looking at quality. We also have a technical team in Clothing & Home, looking at the garment, the fabric, the stretch. We take it very, very seriously. As I say, if there are any issues that any of our shareholders or customers have, we welcome the feedback, and we follow up on it very, very quickly to make sure there isn't an inherent issue within the supply chain.
Okay.
By the way, in the same, the YouGov poll, we call our style creditors.
Yes.
Our style ratings have improved as well.
They have. They've gone up three points. We remain one for value, for money as well, ahead of all of our competitors. Those are the three things that the YouGov-
We had a deep dive, a whole 12 hours on clothing the other day.
We did.
It was a brilliant day. I mean, the day before, I had half a day, I was gonna say in lingerie, on lingerie.
Yes, [audio distortion]
You liked it[crosstalk]. You liked it. Yeah, exactly. I nearly got my words wrong[crosstalk]
Yeah.
Can I tell you, I mean, Richard, that team are a very good team. I mean, the lingerie team, average service is like 27 years .
They're terrific, and they know everything. Quality and fit, 'cause I think sometimes they go hand in hand-
Mm-hmm
... when people say quality, was the number one theme, whether it was lingerie, menswear, womenswear. We will feed it back 'cause we're pretty obsessed with it.
Okay.
In food, of course.
Actually, on kids, following all the standards that you need for kidswear and the finish on kidswear, particularly for babies, to make sure that the seams are very carefully finished.
Yeah.
I mean, we go above and beyond, and we had quite a long discussion around that.
Mm
... which I think is extremely important.
Mm.
Okay, we're gonna stay in clothes.
This is on sizing. This is asked by a member of your shareholder panel again, Margaret Marchant, Sharon Abramson, both in the same postcode of question here: "Why are there so few garments in smaller sizes, 10s, 12s, 14s? I only ever see the larger sizes available, and they're the ones that always end up in the sale.
First, thank you, Margaret. Thank you, Sharon. I hope you're well, long-standing shareholders. Yes, this is an issue that worries me at times.
Yeah.
You know, you go around, you know those little beads you have on the top of.
Of the coat hanger.
So-
Yeah
... coat hanger, so you can see what the sizes are. You go through the beads. You always think, Oh, no number 10s or no number 12s...
Yeah
plenty of number 20s.
It's a constant discussion with all, Katie.[audio distortion].
We raise it weekly.
A little bit of information for our shareholders.
Those little beads are called pips.
Ah.
That's something everyone may have learned today.
Yes
... and it is an art, getting the right pip on the right hanger.
Yeah
... that's a conversation for another day. A couple of things to say. First of all, I think we've still got quite a long way to go on availability, both in dotcom and in our stores, and availability has a number of facets to it. One of those facets is: Can you get this white jacket today in online and in store? The second is: Can you get it in a regular or long? Can you get it in an 8, 10, 12, 16, and 20? What the team have done over the last 12 months is work quite hard to concentrate on having availability on what we call core sizes, and those core sizes are size 10 to 18.
We have lots and lots of statistical information around the shape and size of the UK population, the UK female population, in this example, and the team are working very hard to make sure we get that availability right. We don't get it right all of the time in terms of the way that we allocate that stock to stores, and to Archie's point, sometimes you will see and the outlying sizes are remaining.
It's quite a difficult thing, isn't it? Different clothes actually different size ratios. I was looking the other day with Richard Price at the men's polos.
Yes.
We have some quite colorful ones, the sort of oranges-
Mm-hmm
... and the pinks. What you'd tend to find out, that larger men sometimes prefer to dress in the blacks and grays and not in the oranges and pinks, so we end up with too many large sizes.
Yes.
That's an example, isn't it?
That's right. It's the same with women's trousers. The variability in sizing on women's trousers between a 10 and a 12 and a 14 is very different because our leg sizes are quite different, so the fit feels different. It's a bit of a combination of an art and a science, to Archie's point. Some of it is extremely scientific, but actually, some of it is, how will this product resonate with customers? One of the things I'm really pleased about is that when we get it right, this product does start to move quite quickly. Historically, we would have quite a lot of overstock on items, and sometimes we get frightened of selling stuff through, but actually, you want to sell stuff through because it's product that's really appealing.
Lots more work to do to get that right, and actually, lots of opportunity, because when we don't have that size on that day in store, we can either fulfill it through online, which we don't always do successfully, and if we don't have it online, unfortunately, we lose that sale, and I don't want to do that. We've got a lot of work to do.
I agree with Margaret, though.
You do?
Because it's one of my topical-
I know you do.
-store visit complaints to Richard and the team. Margaret, and is it Sharon?
Margaret and Sharon.
Yes, Margaret.
I agree with them. [audio distortion].
Margaret and Sharon, we get a lot of photos, and w e take a lot of photos, of your questions.
You told Anita as well, to be honest.
Yeah, there was an issue of a gusset.
Yes.
We won't go into it now.
You gave.
[crosstalk] We've already gone around the lingerie cycle. A hanging gusset.
[crosstalk] You gave us a complaint on size of the smocking.
Shall we go to another question?
Yeah.
Did you want to add to anything?
No, I think we should move on.
No, gusset gate is not... Let's take this question from Sheila Richardson: "The new system of ordering in M&S cafes via touchscreen boards or via the mobile phone is impersonal, it seems to be putting people off. I understand that one of the reasons the new system was adopted was to deal with the issues of long waits and queues, but would M&S consider adding an interaction with a member of staff as an alternative means of ordering-
Mm.
perhaps at specific times of day?
Stuart, who's passionate about our cafes, is going to answer that question. Just so, for the shareholders, what this is about is in our new cafes, in our new stores, instead of a system where people have to stand in a long line to place their order before they can go and sit down, they can go to a screen, you know, ping the all-day breakfast and a cup of coffee, and then they go to their table, and it's brought to them. In theory, it saves a lot of waiting time, but of course, it's digital, but it does feel less personal. Stuart, how about it?
Well, you sort of answered it.
Mm.
Which is, I think this is a good way forward. I do take on the feedback from Sheila. I will pick up with Sharry afterwards, the whole idea is, the old cafes we had... I mean, I think I should declare our hand to our shareholders. We constantly have a debate on space, they don't make any money. They're a service, how I balance that in my mind is when I talk to people, the cafe becomes a very important part of the shopping journey. Therefore, I have to be honest, I'm quite protective about the cafe. I remember my nan, God rest her soul, taking me to the M&S cafe when I was a teenager, I thought it was a special treat.
I'm a bit wedded to the fact that where we can, and where we can hopefully add some economic value, we should have a café. The problem is, those old cafés, you normally end up with a very small back room. The team are under pressure, very high wage cost, queues and queues going out the door with people carrying trays. A lot of people struggling with the trays, by the way. I see it all the time on my store visits, trying to carry it, carry the teapot, carry the sandwiches, make their way, have a handbag on their arm. The idea here was using a more digital approach but also saving time. Order on the screen, pay, sit down, we bring it to you, and the efficient back of house is much better.
I'm even glad to say, believe it or not, none of our cafes in the back had air conditioning for our colleagues, which I found completely unsatisfactory. We've been doing a lot around the model for cafes. Where I think Sheila has raised a good point is I've seen this in Leeds White Rose recently, the other weekend. We need to sometimes help customers on the screen, especially if they don't know.
Mm
... how to do it. We'll pick that up as an action as well.
Mm-hmm.
Thank you.
just to actually, I mean, you know, nan is as well, but it's also young moms. I remember.
Yeah
... babies and sort of taking them in.
Yeah
... M&S cafe for a meet up.
That's a good point.
Okay, this is John Dancer, who's been in touch. It's a similar question from Barbara Smith. Thomas Dancer as well. I wonder if they're related. "Can we have an update on store closures and the store rotation plan? Because my local store seems run down.
Well, I don't know which the local store is. We don't want any of our stores to seem run down. The issue here is that M&S has compared to some other retailers, an older store estate. I mean, we actually have got stores which are 100 years old, and that's wonderful. We love them all. Progressively, we want to modernize the estate because we know that our new stores both look more contemporary and stylish, but also they trade more strongly, and they bring a great return to shareholders. We call this store rotation, and it's a program that Stuart is very active on, and we've achieved some good results.
I'm actually Well, I mean, Archie started this when you joined as Chairman and pushed the team on not thinking about just today, but the long-term future of our stores. That's really because I don't think anyone paid enough attention, and that's why we've been outgunned, quite frankly. There's many competitors, I drive around, and I say: 'Why don't we have that shop? Why can't we get it? How come this certain brand has the best location, but if we had it, we would take three times more than them?' But the team have definitely moved on, and I've been quite encouraged by the progress.
Don't get me wrong, to the shareholders who raised the same question, we go into our stores, and very often I send a text message and say to Sacha: "I've congratulated the team for shining up an old stone-
Mm-hmm
... and doing the best they can do, but when are we closing this or moving this shop?" That's probably one in three shops I go to.
Right.
We have gone through every single store in the organization. We have a plan for every single shop. We know exactly where we are in the network, the lease, where we think we should be in the best location, or if we should modernize that store and renew it. As you, as I said before, that 5-year plan, we've brought into 3 years, so we're going at some pace. By the way, as I said at our board strategy away day last week, we're 1 year into the 3 years. The vision is: I want us to be in a place in 4 years from now, where we're proud of every shop. That really means growing some in the next few years.
Mm-hmm.
180 stores we've laid out already is roughly the ideal. Katie, Richard, Alex.
Mm.
Jeremy, we discuss this constantly, because that might go up or down, but it's about having the right space. We've got some exciting work on clothing, the new format clothing. Food is really a proven format. We need to innovate and constantly learn, 80% of our food format is working, and it's doing very well. In clothing, we've now got a good format, like in Stevenage and White Rose, but actually, a Purley Way store, where it's only 20,000 sq ft clothing, is also now working. That gives us more options. So, 184 line stores, we've got about 20 closures this year. 10 of those, we've found better sites for, like the stores in the video, the good examples. I think for the first time, we're confident. We just need to get a decision on Marble Arch.
Dare I raise it, as one of those stores?
Right.
We were told May, we've been waiting two years...
Mm.
We're now told July.
Right. Okay, July, we think we might have another one.
Well.
All right.
[audio distortion]
Okay. There's another question, it's from Rachel Palmiter. Any plans to reduce the amount of palm oil found in food, regardless of source?
Well, thank you, Rachel, for that question, and Stuart or Katie will respond to that. What this is about is that there's a concern that the palm oil is such a very good ingredient. It's a very useful ingredient, and if we don't have palm oil, the alternatives may not be as good, or we might have to use animal fat, which other people don't like. The question is, the risk is by using palm oil, you're promoting deforestation in areas where the wildlife is very sensitive, and obviously, we don't want to do that. The trade-off is, if you don't use palm oil, it means you're not supporting the sustainable palm oil growers, the people who have good conservation standards, and then they end up selling their palm oil to other people who are less concerned about conservation.
It doesn't necessarily follow that boycotting palm oil produces the best outcome for the environment, and that's the problem that we've been wrestling with. As I said earlier, on the environment, it's not populist pressure, there's valid arguments, but we always try to do the right thing, regardless of what people think. [audio distortion]
[crosstalk] No, you're Archie is spot on. I mean, we're aiming for about 100% sustainable palm oil in the few products we use it. I mean, I just reinforce in Archie's point, the alternatives aren't very good, therefore, when we see a competitor do that, there's certain things we wouldn't do. I think it's about sustainable palm oil. We're now at 98%, I think. That's gone up from about 90% just a year and a half ago, we're on the right journey.
Okay. I should say, look, we've got a time, I think, just for a couple more questions, if you can keep your answers succinct and then just a reminder to you, there is a mood poll running. Archie is going to be revealing what the mood poll, whether it's gone up, whether it's gone down, we'll have a couple of questions before that happens.
The, I think, the mood poll is going to go live, isn't it?
Well, I believe so, after two questions.
Yeah.
We've got two questions, and then it's going to go live. Do you want to remind people what the question is?
Yes, in case you've forgotten, the question is: Do you feel more confident about the future of M&S and your shares than you did a year ago? We asked the question earlier, we've got six out of ten.
Right.
Gonna ask the question again. As soon as you see it go live, please vote, and we'll see how we've done.
Great, okay. It's going live very shortly, but I, can we squeeze in two more questions?
Mm.
I think we probably can. I'm quite confident. This one is from... I haven't got a name on it. It's from one of our interactive investor. M&S Bank is falling behind competitors in providing customers transaction details in a downloadable format. When are you going to catch up?
Yes. Well, is, I was going to say, Mr. Interactive Investor, good question. The, what's going on here, the Interactive Investor nominee base are joining our AGM, their names aren't disclosed for complicated reasons. That's why we don't know who they are, thank you for the question anyway. [crosstalk] Katie tell us about the bank. You put a lot of work into this, and it's a very valid question.
It is a very valid question, and thank you. We run our bank servicing through the HSBC platform. HSBC are our partner in M&S Bank, and they are investing a huge amount in digital capability to allow very easy self-service for customers, and frankly, other competitors are better at this than we are. In the next release of our internet banking platform for M&S Bank and for HSBC, this will be a feature that will be available on that, so it's coming soon, thank goodness, and not before time.
Okay.
You're absolutely right to raise it, so thank you.
Mm.
Okay, and thanks for giving the answer, succinct, 'cause it allows us to squeeze in this last one. Helene Shatner has been in touch: Are you planning on opening food stores in Europe, as you did previously in Spain and in France, or is that?
[audio distortion]
... too complicated now because of [audio distortion]?
Well, Anita, I don't know whether you agree with me, but I think we should stop using the word Brexit, really. It was, you know, the referendum was 7 years ago. It has had a big effect on our business, we need to move on. The answer to the question is, well, I mean, Stuart may have some plans I don't know about, we're not planning to open stores in Europe for the simple reason that Brexit has meant, and the customs controls into the EU have made it very difficult for us to get our ultra-fresh food-... into Paris, etc . We did have to close down our business in France. We were probably the largest sandwich retailer in Paris.
It was profitable for us, and, you know, it was popular in Paris, but we had to close down because few people realize this, but under the EU customs rules, we can't now legally send some of our product into the European Union, for instance, processed meats. It's not legal to send it through and e qually, for things like our sandwiches, because of the delays now with the customs checks on the borders, by the time the sandwiches arrive in Paris, they're not as fresh as we'd really like. So, we didn't really have any choice about that. We still do operate a business in the Republic of Ireland, the cost, again, of dealing with the customs controls, the border controls, swiveling our sourcing to Ireland.
We think we'll get it right, but it does mean that the profitability of the food business in Ireland is pretty much gone to breakeven.
No plans as far as I'm aware.
There's definitely no plans. We have big international plans, but it doesn't really involve Europe. As Archie has articulated, inflation was the big challenge, but the second very close challenge was the B word that we don't like to mention 'cause we've all moved on. It's added a considerable amount of complexity, of cost, of distraction, and we're still trying to find out the way through with the new Windsor Framework and all the labeling changes.
Mm.
of these next couple of years, just dealing with Republic of Ireland, never mind anywhere else in Europe. That's enough.
Okay. That's enough. I mean, look, I've pushed this as far as I can. The red light is now flashing. That is the end of our Q&A for today. I think I may have caused some confusion on the mood poll.
Oh.
-make it not a bad mood poll and explain that again. Thank you very much for all your candid answers. Thank you to you at home for your questions. I touched on earlier, a summary of all the registered questions and their answers are going to be posted to the shareholder section of the M&S website tomorrow. That's going to include any questions that we didn't have time for today. Let's go back to you, Archie.
Thank you, Anita. I'm going to announce the outcome of the second mood poll in a moment. Before doing that, I just want to say a massive thank you to all the shareholders for joining us, including those who've been able to join us in the room. Thank you for coming, and we appreciate it. Anita, a massive thank you to you.
Pleasure.
You've been fantastic. You've been the voice of the shareholder, really appreciate it, and we'll be listening with interest to your podcast in the area.
Oh, thank you.
We hope you'll come back next year.
Thank you very much.
Thank you, everybody. I'm now going to move on. There's a formal part of this meeting, which includes all the resolutions, and luckily, our Company Secretary is going to introduce it.
Archie, thank you. As you say, to the formalities. Resolutions one to 22 are set out and explained in the notice of meeting, which was made available to you, our shareholders, on the 6th of June. We propose that the notice of meeting be taken as read, and I now give formal notice that voting on each of the resolutions is set out in the notice of meeting will be via a poll. I point our registrar, Equiniti, to act as scrutineers, and I now declare the poll open. Now that the poll is open, you'll have noticed voting options have appeared on your screen. I'm just gonna talk you through the process very briefly. To cast your votes, all you have to do is select one of the options on your screen: for, against, or withheld.
Do remember, though, that a vote withheld is not a vote in law and will not be counted in the calculation of the votes for or against a resolution. For each of the resolutions, you can vote and change your vote at any time until the poll closes, and you can return to this voting page at any time by clicking the Voting button at the top of your screen. You can vote for all the motions at the same time by clicking on the Vote All direction button at the top of the page. You'll still be able to change your mind on individual motions if you use that feature. There's no final submission button. Once you've selected your voting option, you'll see a Vote Received confirmation on your screen, and that will be a valid vote unless you change your mind before the poll closes.
The poll will close 15 minutes after the meeting has concluded. The final results of the meeting will then be announced via the London Stock Exchange and posted on our company website as soon as practicable after the meeting. I trust that's been helpful, and thank you for your votes. I'll hand back to you now, Archie.
Thank you, Nick, I should have introduced Nick earlier. Nick Folland is our company secretary and our legal counsel, keeps us, as you can tell, generally on the straight and narrow. That concludes the formal part of the meeting. The one thing that remains for me is to declare the result of the second mood poll. As you recall, the question is: Do you feel more confident about the M&S future and share price than you did a year ago? The initial result was six out of 10, the revised result of the second poll, after all the Q&A, is 7.5 out of 10. That's certainly some improvement. Probably leaves scope for further improvement.
... in the year ahead as well, so that's good, too. That, that's it from us. Just to, once again, a huge thank you to you all for joining us. We really appreciate it. We appreciate the support. Any further questions, of course, do come back to us. We always love to hear from our shareholders. Thank you all, and I'm now going to declare the meeting closed.