Marks & Spencer

Procurement policy
Marks & Spencer uses a list of preferred contractors for its construction programme. The list consists of about 30 firms that have pre-qualified based on, among other factors, their health and safety records, financial standing and experience of similar work.

As projects arise, they are put out to tender on a competitive basis. This is the only form of contract currently used.

M&S is considering framework agreements for future work, although this looks to be some way off. Should this route be followed, the company will work with fewer suppliers.

Current and future projects
Marks & Spencer's capital expenditure on new assets rebounded to almost £300m in the last financial year. Fixture and fittings accounted for the majority of investment, although repairs and renewals (not included in capital investment) increased from £91m to £116m.

In line with the group's recent return to form, there has been a rise in shop fitting and renewals. In 2000 the group trialled five Classic Shops in order to attract back customers it had lost over the early decade. Due to the success of this, 130 new store formats were planned for mid-2002, and a further 40 for 2003. Meanwhile, the group's store renewal programme continues, with 100 stores renewed in 2001 and 63 in the six months to the end of September 2002. As a result of this, close to 80% of the group's retail space has the new format. The new Home format was extended to 27 large stores in 2001/02. The group's new food stores – Simply Food – continue to attract interest, with 50 stores planned over the short term, 20 of which are planned for the financial year 2002/03.

Capital expenditure in the six months to the end of September 2002 amounted to about £165m. This included 63 store renewals, three new Simply Food stores, and 29 coffee shops at a cost of £32m. At present the average cost of a store renewal is about £600,000.

Essential information
Announcing its latest interim results, Marks & Spencer outlined a near 8% rise in like-for-like sales in the UK, alongside a near 40% increase in operating profits. The strongest group performance was in UK retail, where increased sales and higher margins drove the business forward. However, there were some mistakes. For instance, the group admitted that it had bought too much womenswear and had failed to sell vast amounts of children's clothing. The latter led to a £5m provision as clothes have had to be sold at below cost. Elsewhere, Marks & Spencer is having to delay the sale of its Kings Supermaket in the USA, as the firm interested in purchasing it cannot raise the required finance.

The group's overall investment of £165m over the six months suggests that the total for 2002/03 will at least match last year's total.