Marks and Spencer Group plc (MKS) Earnings Call Transcript & Summary

Good morning, everyone. I'm Archie Norman, and I want to welcome you to the Marks & Spencer 2020 AGM. Obviously this is going to be quite unlike any other AGM we've ever held. I'm sitting here in Waterside House, our support center, where normally there would be 2,000 people buzzing, around hammering away at the computer, buying, selling, arguing, debating. But today, the building is silent. And behind me, you can see the edifice of St. Mary's Hospital, a hospital where during the height of the COVID crisis, the intensive care unit was full of patients and where our colleagues were delivering daily food parcels to support the NHS workers. I'm wearing my Marks & Spencer suit, in case you're wondering. I'm probably one of the very few people in the country wearing a suit today, and I've got my AGM tie. It's a flamingo tie obviously one of ours. I've checked back and we haven't sold very many ties in the last 3 months and even fewer with flamingos on them. But -- so here we are. And instead of the usual ruckus, AGM we've had at Wembley Stadium with lots of wonderful shareholders, old friends, alumni of the company, pensioners joining us, this is going to be an e-AGM. And of course, I regret the fact that we can't see you all. I hope we'll be able to catch up again in the future. But there's an opportunity in this, too, which is because of this format, anybody in the country, any shareholder, can dial in to the AGM and participate from wherever they are. So we're going to try and make it an exciting and entertaining event, and I hope you're going to enjoy it. In a moment, I'm going to ask Steve Rowe, our Chief Executive, to talk a bit about the performance of the business. I'm then going to introduce the Board. We've got a few changes that I'd like to tell you about. We're going to take questions, probably the highlight of the AGM. We've had some questions already, but we're going to take some live questions, too. And I know that some of you are already limbering up with your ideas. And then finally, we'll do the resolutions and the formal part of the meeting. I'm afraid this year, there's no sandwiches for AGM attendees, but I hope you all got a good lunch in the fridge anyway. First, a few words from me. It's been a tough time for the business, but also, of course, for our shareholders, too. And for us, it's been a huge frustration because we felt with our transformation program, we were starting to show some real progress before the COVID crisis struck. Our Food business was outperforming most other food retailers, and we were seeing some really exciting new products, new stores developing. In Clothing & Home, Womenswear was, for the first time for years, just about holding market share. There's a lot of progress on the ranges, some really stylish product. Menswear is coming through, Lingerie was growing market share to record levels, and we're seeing growth back in Kidswear, too. But that all feels like ancient history now. It's come and gone. And of course, in the last 14 -- 12, 14 weeks, most of our clothing stores, most of the time have been closed. Food, too, has been quite challenged because we're not like the major grocers. Most of our Food business is fresh, sandwiches, ready meals. And so when people are stocking up for the crisis, they were less likely to shop with M&S. And some of our travel locations in stations and airports have obviously been closed. Nonetheless, food has traded quite well and increasingly strongly as we've gone through. But overall, that does mean that the business had been very challenged. And financially, this is a bit of a loss year for shareholders and for the business. For shareholders, there's no dividend this year, and we've said there's not likely going to be a dividend next year either. For colleagues, there's no pay increase, there would be no bonus for management throughout the year, last year or this. And people, with all, that have been working flat out to secure our future and make sure that we do come out of this, stronger than we came in. And behind the scenes, I want you to know that there has been tremendous progress. We've been making a lot of changes. It's alleged that Winston Churchill said never lose the opportunity of a good crisis. And we certainly try to take advantage of the opportunity this gives us. People have been working so differently, working from home, working in a more efficient way, making decisions faster, delegating decisions to the front line and supporting our stores and store colleagues. And that's why we've launched this program that Steve will tell you about called "never the same again" because we want to come back from the crisis a changed business, a business that's moving faster in a sense to move 3 years in one. And with that, too, I want you to know that the Board has been putting in a shift, working hard because we've had to secure the liquidity of the business. To make sure we have the debt facilities to see it through. And of course, we've furloughed 30,000 colleagues and taken advantage of the government debt facilities. The Board has been meeting every single week to discuss progress. We've got 2 new board members, whom I'll introduce in a moment, Tamara and Sapna, and I wanted just to say a huge thank you to Alison Brittain. Alison has been on the Board for the last 6 and a bit years. She's the Chief Executive of Whitbread. She's been a terrific contributor. We'll miss her enormously, but we wish her luck for the future. Finally, a few words about our colleagues. Roughly 50,000 colleagues have been working throughout the crisis, working to keep people fed, working to support the vulnerable, working to minimize the queuing in our stores and to keep them safe. Three of that colleagues have passed away as a result of coronavirus, and our thoughts and prayers are with them and with their families. But overall, we think that the instance of virus amongst our colleagues have been no higher than the national average. So it feels like we've managed to achieve safe working and a safe environment for our customers as well. And to put it in perspective, I decided I'd look up what we've done in the past in similar times of crisis. And I got hold of this book, it's called the Chairman's Reviews at Annual Meetings since the incorporation of the company. And I thought I'd just read to a short passage. This comes from Simon Mark's review, one of my predecessors, on the 10th of June 1943. I won't read it all out. But he says on staff, "Over 1,500 of our men have joined HM forces. It is with deep regret that I have to report that 37 have been killed, 25 are reported missing and 37 are prisoners of war. To the families of the bereaved, we extend our condolences in their sad loss." And he goes on to say of our pre-War staff of 20,000, only 3,000 are still with us, the majority having left to take up other work of national importance in the war effort. So this is tough, but there've been -- it was even tougher then. And that was the time when the business traded throughout the war despite having stores destroyed by bombs and came out much stronger. And our objective is to do the same again. So I want to conclude by thanking you all, thanking the shareholders, particularly for their patience but thanking our colleagues for their incredible sport for the business. This business was founded in 1884. In the last century, we built a great business. And in the next century, our plan is to build an even greater business for the future. That's all from me. In a moment, I'm going to introduce Steve Rowe. But before doing that, just a little bit of fun. We wanted to find out how all our shareholders are feeling, both before our meeting and after. So we're going to conduct a mood poll, and you'll see it on your screen around now. And the question is, "How confident do you feel about the future of Marks & Spencer?" The voting instructions are on the screen, and you have to choose on a scale of 1 to 10. We'd love to know how you're feeling. Now while you do that, I'm going to hand over to Steve Rowe, our Chief Executive.

Thank you, Archie. Good morning to all of you, and thank you for joining us today. Before we move on to the business of today's AGM, there are 3 things I want to cover with you. Firstly, a brief summary of our progress last year. Secondly, our response to COVID-19 and how that is shown as what M&S is capable of. I will cover the decisive action taken to secure the future of your business and the lessons we have learned in our response to this crisis. And finally, as we face into a future of which none of us can be certain, we have drawn up our "never the same again" program. This morning, I want to show you virtually our Stratford store, how we're using the lessons of this crisis to accelerate the parts of the transformation necessary for M&S to succeed in this new consumer landscape and to ensure M&S is changed for good. To start, a brief overview of our performance last year. We reported an adjusted profit of GBP 403 million, which included an estimated adverse impact on trading of around GBP 52 million for the pandemic in March. Prior to this, 2019/'20 was a year of good progress against our transformation. We completed our acquisition of 50% of Ocado Retail, which will accelerate growth in food and is now more relevant and strategically valuable than ever. Our Food business consistently outperformed the market. And in Clothing, we began to see the green shoots of resetting the business in the second half. The work we have done to reengineer the basic infrastructure of the business has helped us to respond to the crisis in a more agile way. Reflecting the accountable business model, we've shifted to segmental reporting of Food, Clothing & Home and International, and our performance illustrates the strength and flexibility of having combined operations under 1 M&S brand, which has never been more important. From the outset, we recognize that we are facing a crisis whose effects and aftershocks will last for the coming year and beyond. Despite the trauma of the crisis for everyone, I have never been more proud to lead M&S. The way our people have rallied to support our customers and communities has been nothing short of awe-inspiring. As a business, it has galvanized us to take decisive action to secure the future of the business. Our first priority was to ensure we have substantial liquidity for the next 18 months. We've done this under a proven COVID-19 scenario, which was formulated in the early days of lockdown and has been stress-tested to even greater downside, should that be required. Relative to the original budget, the scenario assumes very substantial declines in Clothing & Home sales in the U.K. and International with volatile trading in Food. This does not represent a forecast but is a means against which we have planned over 1 billion of steps to reduce costs and manage cash flow. Turning to the cost and cash actions. We've had to take some difficult decisions to secure the business for the long term, which have affected you, our shareholders. This includes the cancellation of the final dividend for last year. We appreciate your patience. There have been 3 major sources of cost reductions. First, we have deferred all nonessential spending. These include freezing pay all levels in our business, pausing recruitment activity as well as marketing and some technology spend. Second is saving in areas related to volumes, such as logistics. And finally, under the scenario where we received over 170 million of very welcome business rates of relief and 50 million of furlough receipts as reported at our full year results. The balance sheet will also be supported by substantial reductions in CapEx, where we are focused solely on high-return, short payback activity. As the U.K.'s leading clothing retailer, one of the biggest challenges has been to manage the backlog of unsold stock and the forward pipeline of stock, too. In the graphic, you can see, as part of our cash management, we canceled around GBP 100 million worth of summer orders. We drastically reduced our future commitment and are holding as much more open to buy. However, in support of our long-standing supplier partners, we have paid for all garments in production and fabric, which was already committed to prior to the crisis. In addition to this activity, we've undertaken a detailed exercise to manage the flow of our stock. This will see us carryover year-round products, an area of strength for M&S, into the autumn/winter season, as well as hibernating our seasonal stock until spring/summer '21. As you can see on this graphic, we expect the group to experience an adverse movement in cash flow under our scenario, with a peak drawdown of facilities in the early autumn. However, as I said, one of our first priorities was to secure our liquidity position. And relative to the GBP 1.4 billion of combined credit facilities, we will retain very substantial headroom even at the peak. While the scenario assumes we end the year with drawings of GBP 300 to GBP 350 million, we shared our full results that in the first 6 weeks, we'd outperformed this by over GBP 150 million. In addition, the balance sheet will benefit from the saving of our final dividend. This leaves the possibility of the group being close to structurally undrawn on its facilities by the end of the year and able to invest in additional high-return opportunities as we better understand the trading patterns. While some customer habits will return to normal, others have changed forever. The trend towards digital has accelerated and changes to the shape of the High Street, bulk forward. Most importantly, working habits have been transformed, and we have discovered we can work in a faster, leaner and more effective way. We are determined to act now to capture this and deliver a renewed, more agile business in a world that will never be the same again. On the screen now, you can see the valuable lessons we've learned during this crisis. We are committed to making these positives permanent through our "never the same again" program. And to bring this to life, I paid a visit to our Stratford store. [Presentation]

Well, thank you, Steve. A terrific presentation. Here we are. This stage of our AGM is going to be a bit more like breakfast television than Wembley Stadium. Although we can't share some for social distancing purposes. I hope you'll forgive me, I've taken off my flamingo tie for the occasion, and I hope that all the viewers don't think I'm improperly dressed. Normally, I know that some of our AGM attenders buy a special outfit each year for the AGM. So I hope you're all sitting at home in your finery. We can't see you, but I'm sure you're all looking magnificent. This session is going to take about 45 minutes and maybe a little longer. We'll see how the questions go. I'm going to start off by giving you the results of the mood poll that you all participated in. I'm going to talk through the -- introduce the Board and the new Board members, and then we're going to come on to questions. And we got hundreds of questions literally come in ahead of the AGM. And Nick, I'm hearing that there's dozens and dozens of questions coming in as we speak online.

Absolutely. I've got them in front of me, so I'll ask a few as well.

So if you see Nick kicking me as we go along, it's not because I've said the wrong thing. It's because it's time to take a live question. You'll see as we go. Now so let's come on to the mood poll. So what -- the exciting news is we have had a tremendous participation. 1,415 people have voted in the mood poll. And we have incidentally, literally hundreds of shareholders online watching this session. So the results of the mood poll, remember, is 1 to 10, "How do you feel, how confident do you feel about the future of M&S", and the result -- average result is 6 out of 10, which actually, it's not bad, Steve, is it? I mean in the circumstances, it could have been a lot lower.

Very good considering [indiscernible].

Now we're going to take another mood poll at the end of the meeting to see if we've moved on from 6 or gone down to 5 as a result of what we said. So we'll see how that goes. You're the scorekeepers. Okay. Let's move on from there now to introduce the Board. In the room here, I have on my right, Nick Folland. Nick is our company Secretary and Corporate Counsel, and he's the guy who keeps us all on the straight and narrow.

Yes.

So welcome, Nick.

Thank you.

There's myself; Steve Rowe, you all know as our illustrious Chief Executive.

Morning.

And Owen Tong is joining us for his first AGM. He's just joined us. Steve -- Eoin, you've been with us...

This is the end of my fourth week.

Fourth week and still here as Finance Director, and Eoin is going to say a few words in a moment. The Board. I think most of you will know members of the Board. We're not all in the room because we couldn't all fit in the room, but all Board members are online, a part is basing in the meeting. I just want to run through them very quickly and then ask the new members of the Board to introduce themselves. Andy Halford is our senior independent Director, and he also admirably chairs the Audit Committee. Andy is Finance Director of Standard & Chartered. He's been on the Board for about 7 years, and he's an absolute pillar for me and I think for all members of the Board and a terrific contributor. Andrew Fisher was one of the -- was a digital entrepreneur, built up Shazam, which was successfully sold to Apple, is now Chairman of Rightmove and does a number of other things. He is also Chairman of the Remuneration Committee, and enormously important to us on a variety of fronts. Justin King, you may say Justin didn't need any introduction. I think he might say that. He was Chief Executive of Sainsbury's for around about 10 years. Immensely well known, formally worked at Asda. And of course, formally, is actually himself, an alumni of M&S. And one of the people who developed Simply Food and the Food business into the form it is today. Pip McCrostie has been, again, a terrific contributor for us. She was formerly Head of Corporate Finance and build up the corporate finance globally for Ernst & Young. She now does a variety of board work and other things, and she's been with us for about 2 years on the Board now and been a terrific addition. Now we've got 2 new Board members, and we thought because you haven't met them and can't meet them physically, we asked them to introduce themselves. First, start with Tamara Ingram.

Hello. My name is Tamara Ingram. Just to give you a little insight into myself, I'm passionate about people, consumers, brand and marketing. I've been Chief Executive of many advertising agencies and the global Chief Executive of J. Walter Thompson. Not only do I have a passion for driving business forward, I also, in my private life, love the theater and sat on many theater Boards, and I'm a fan of the Arsenal Football Club. Sad for many, sometimes joys for me. I have 2 fantastic children, Max and Anya. I'm so thrilled and honored to be sitting on the Board of M&S now because we're at an extraordinary turning point. As a transformation, so digitalization to [indiscernible] to what is happening in Food, to what is happening in Clothing. And it will be a privilege to be part of taking this extraordinary British brand forward.

Hello, I'm Sapna Sood. So I was born in the U.K. but grew up in Australia. And. since then, I've really had a global career. Spending 18 years living in 8 countries and working in industries like cement to gases and now in food services. During that time, I've spent time in operations and also large transformational roles as well. I've spent the last 4 years or so being a non-Executive Director at the Kering Group, the French luxury group, where I was Head of Sustainability, a subject that I'm very passionate about, along with diversity and inclusion. For me, when I was first approached about the role at M&S, I was incredibly excited. M&S for me stands for quality of product, great customer service and a strong tradition as well. Looking forward, I see the transformation takes all of these into account, looks at the products and where they're going and the supply chain. And this is encompassed by having a robust technology and digital framework. And that's really about the transformation of Marks & Spencer's, which is so exciting to be a part of.

Well, thank you, Tamara and Sapna, absolutely amazing to have you on board and terrific introductions. And now I'm now going to turn to Eoin. Eoin, you are 4 weeks in. Tell us a bit about yourself.

Thank you, Archie, and I'm delighted to be here for my first AGM as the new Chief Financial Officer, and good morning, everybody. I spent the last 26 years working in a variety of financial roles. Most recently, at Greencore Group plc, where I served as CFO and they are a key supplier to Marks & Spencer. And it was really there that I spent a lot of time getting to know the company and the culture. And it's a brand that I've always long-admired. So it's a real privilege for me now to join and to be part of the team to drive the transformation. It's obviously an interesting time to join. The COVID crisis presented a lot of challenges to everyone across the world. But I think it really does present a real opportunity for change for us as a company. And I'm personally committed to bringing capital discipline and strategic challenge to that change. As you might hear, I'm from Ireland. I was born in Dublin. I currently now live in Leeds actually with my family, and of course, that's the home of Marks and Spencer. So thank you, and great to be here.

Well, thank you, Eoin and it's absolutely terrific to have Eoin on board. Now we're going to come to the really exciting part of the AGM, which is the questions. Just as you are clear, I'm going to read out the questions, the questions we've already received. And I'm going to turn to Nick to read out the live questions as they come in and we'll alternate between the 2. Just in case you're wondering, we're going to take the fast bowling and the slow. So you'll see, we've got some ripping questions and some really fascinating points. I'm going to try and take the questions where there's a lot of interest. We've got multiple questions on things like Ocado and so on. So we'll make sure we take those.

I'm going to start with a question from one of our original small shareholder panel members and somebody who's been a loyal attender of M&S AGMs. It's Mr. Chander Hingorani, and Chander's asked, "Many of the big groups are having to close shops due to the growth of online. How will this affect M&S? And what do you plan to do with stock you've been unable to sell in the lockdown? Will you have a huge sale?" So I'm going to ask Steve to talk about what we do with the surplus stock, which obviously is a big issue because of the lockdown. First of all, on are we closing stores, I think it's well known as part of the transformation program, we are closing stores, and we're not at the end of that process. But it's important to understand that really, what we're trying to do is rotate our store portfolio because we've inherited -- this management team has inherited a legacy of some very old and some quite out-of-date stores. And some of them are terrific, but some of them do need upgrading. And as a result, we are progressively closing down underperforming stores and then opening new stores, which can be very, very profitable for us. And we do see opportunities on both sides as a result of the crisis. Now let's us talk about the surplus stock because obviously with the crisis, demand's being well down, our clothing stores have closed, are being closed for a large part. So we haven't been seeing a lot of clothing and all the spring and summer ranges have been here. Steve, what are we going to do about it?

Well, Archie, this crisis hit retail almost the worst possible time. We were at the end of a spring season, we were just introducing summer merchandise. And of course, we're producing autumn/winter merchandise at the same time. We had 3 seasons worth of stock. We've talked about the downside scenario facing the business. And that looked like we had probably about GBP 1.5 billion worth of merchandise too much in the system. And it really was the absolute focus of the Clothing & Home team. The first thing we had to do is work with our suppliers. The relationship with the suppliers are very strong, as you know. We made sure we paid in full for any merchandise that was on the production lines, and we've agreed to take that at the right time. Additionally, we've picked up the commitments from the fabric that we had ordered and make sure we've got payment terms for those in place. So I think we've done the right thing and better than most of the retailers. However, there was a lot of stock on the way and a lot of stock in the U.K. and demand, as you said, really is subdued. The first week after lockdown, we were 85% behind last year's sales on clothing. We've had to take some deep storage. And we're going to hibernate some merchandise. And the advantage is that much of the merchandising clothing home is flow, great wardrobe essential product. Cash may jump out actually.

So hibernate means we're going to put it away until this time next year or spring next year?

Absolutely. So we've got some merchandise, which is core and great value product, which we'll sell this year and next year. And we've made sure that's hibernating.

About how much are we going to hide given the...

Well, there's about GBP 500 million worth of selling value, Archie, of that merchandise. Really, things we know and love, best M&S products, leggings, fresh feet socks, cashmere jumpers, and that's great. So we've got that planned. We have, of course, got too much surplus spring and summer merchandise. And what we have done is had a series of sales rather than 1 huge one. And what we've done with that is given 10% of the proceeds to the National Households Trust, which is about us playing our part in the community.

This is the rainbow sale.

Absolutely, the rainbow sale, and the customers have thoroughly loved what we're doing. So I think we've done the right thing for the shareholder. But also the right thing for the consumer and for the communities working. And we are looking forward to a rebound in the autumn. And as a back to work, back-to-school.

Yes. Back-to-school would be very big, wouldn't it?

Back-to-school should be very big. We're the market leaders in school where as you know, there can't be a kid in the country who's got a school uniform that fits at the moment.

So to Chander's point, in a sense, we are having a big sale. There's a limit to what we could do because the demand at the moment isn't really there. But the whole industry is in the same place.

The whole industry is in the same place. We have been trading our stores, and our colleagues have done a fantastic job getting ready for opening. We've created what we think is a very, very safe environment and customers are responding well. And we're starting to see them come back, but this is a problem we've got to deal with.

All right. Thank you, Steven. And to Chander, thank you for that question. Now we've had a lot of questions about Ocado. You'll all know that the Ocado switchover from Waitrose supply to M&S supply is due in September. So it's quite a big moment for us, a huge amount of plan has gone into that. But I wanted to take one now and then Steve, ask you to say a few words on how you see it going. Michael Kelly says, "When our joint venture with Ocado starts in September, will shareholders get priority delivery slots?" Now this is quite a tricky question because I mean tricky in the sense, it's a good question because Ocado, during the crisis, of course, been in huge demand. Any number of existing Ocado customers increasing their orders and additional people trying to get on to the Ocado delivery circuit. And as a result, because they distribute out of these big CFCs, these robotic warehouses, they're operating at capacity. Right now, they're at capacity. So we can't say how much scope there will be for new M&S customers or shareholders after switchover. It's likely to be very limited. Of course, as a result of this, Ocado doing extremely well, and we expect in the next year or so to hugely increase the capacity. So there should be in time, room for everybody. But it is going to take time, isn't it, Steve?

Yes. I mean, we really had plans in place to extend the capacity of Ocado and Ocado Retail with M&A. About 1/3 of the Ocado business has an M&S customer involved in that transaction. And of course, we want many more, but it is limited by the location of those CFCs, customer fulfillment centers, and there are 4 in progress at the moment, Bristol, Purfleet, Andover and extensions to areas. Now I've been to see those and progress is good, but it really is the start of New Year where we get extra capacity within the Ocado system.

So a huge capacity expansion in Ocado coming. So this could be very exciting. But we should see this as a 3-year process, not just as a September process.

Absolutely. There are still areas of the country where Ocado aren't represented. We know Scotland and Northern Ireland currently aren't represented and it's going to take us some 3 to 5 years to extend the reach of Ocado in total. But I think this does show you why it was absolutely the right investment to become a joint venture. This is where the food business is going.

It's an interesting point. When we did the Ocado acquisition, and we had to have a rights issue to finance it. I think it's fair to say that shareholders were pretty divided. There was some who were enthusiastic but quite a number who are pretty skeptical. We're not hearing any skepticism now?

No. None at all actually.

Yes. So we're delighted with the progress we're making in Ocado, but it is going to be a big program, and it will take 2 or 3 years to get the delivery slots in place. Thank you, Michael, for that question. I'm glad to be able to get that all on the table. Now no AGM would be complete without John Farmer. And John, you've been a great supporter and a great critic and dialogue partner for the company. You've come to a lot of our small shareholder lunches and we're sorry we can't have you in the room. But you sent in characteristically a question. And of course, it's not 1 question. It's about 3 questions because that's what you always do. I'm going to read it out, and then we'll have a go at answering it, all right? So John asks, he makes a statement, really, it's not even a question. But what he's asking is total shareholder return to March was minus some 50%. A decline starting well before coronavirus -- the coronavirus pandemic, below even the FTSE 100, especially disappointing as 2019/'20 final dividend and next year's dividend are canceled. He puts in brackets, proportionately all or partly at bank consistent is not quite true. What saliently will the Board be doing to rectify a decade of incompetence and when? And he goes on to say, "Why does Marks & Spencer underperform the competition and what is being done to rectify it?" Revenue is GBP 10.2 billion and profitable for tax is only GBP 67.2 million. Actually, John, the profitable tax is GBP 403 million before adjusting items, you've taken adjusting items off, which is what it gets to GBP 67.2 million. But that's sort of -- is the glass half full, glass-half-empty way of looking, isn't it? So John, we can tell you we're on cracking form. Steve, I'm going to ask you to talk a little bit about this. But what I'd say is we completely recognize what John is saying, I mean we're all here to drive shareholder value and to build a great business for the future. But what we inherited and started with 2.5 years ago when we started the transformation program was a company that's in decline. And we've been taking all the steps we've been doing, the transformation, big changes in management team, in culture in the way we're organized in the ranges in Clothing & Home, which Steve has already been talking about. We're going to talk about more in food, where we're now prior to COVID move back into a position where we're leading the market and outperform most of our competitors. So this is what the transformation program is all about. None of us want to be in a position where we see the share price go down. We're all shareholders in this one. None of us want to be in a position where we have to cut the dividend. And it's just a painful consequence of where we are. Steve, do you want to talk quickly, without recapping your entire presentation, about what we're doing to remedy the Board's incompetence?

Well, the first thing I'd say, Archie, and finish to the question, we should point out the GBP 235 million of the difference between that PBIT and the adjusted profit actually relates to stock write-off for COVID-19 and that's the Clothing & Home stock, and we had to take an adjustment there. I had thought at the end of February when we did our presentation, I'd be saying something rather different to that which I did in the video. Our Food business had outperformed the market for 51 out of 52 weeks. We've seen volume growth, value growth and new customers in every area of foods, which was fantastic. And even in Clothing, at the end of February, we were 0.3 like-for-like on the year. Something we hadn't been for a long time. Now clearly, there's so much more to do. And COVID has changed the world. But we -- because of the work we've done on some of the foundational system development, we're able to course through the first phase of this in good shape. And I do believe we're going to come out of this a stronger, better business.

I mean this Board is here to turn around the business. That is what we're all here for and be working incredibly hard to doing that. And one of the really frustrating things about COVID is that before it struck in the first quarter of this year, we thought we were really showing some progress. I mean I think we referred to green shoots. I mean, yes. But the Food business were performing strongly. In Womenswear, we thought we were just about holding market share for the first time for some time, pretty close to flat sales in stores, growth online. Menswear was becoming more contemporary, more relevant. We were growing market share in Lingerie.

Yes. It's the biggest ever market share in Lingerie, and 37.6% share of the bra market in the U.K.

We accept there's much more to do, but we thought we're going to be able to show a bit of leg and then the crisis came in and so closed it all down.

Absolutely. And the change at the end of March was severe, both in terms of -- it was traumatic for the business as it was for the nation.

So thank you, John, for the question. We could talk a lot longer, but thank you for the question, and we hope you are well. Now we've got questions pinging in live, and Nick here has got -- I'm seeing him scrolling through the computer. Nick, pick a live question for us and let's see what we can do.

Yes. Okay, thank you, Archie, I'll do that. This one is from Ms. Jennifer [ DeYoung ]. So thank you for the question. She says, "Why has M&S not managed to put together a delivery service like Sainsbury's Chop Chop and Waitrose' Rapid during lockdown? A huge opportunity lost while waiting for Ocado in September.

Yes. Very relevant question. And of course, we've seen this huge switchover to online. And food delivery is not just us, but everybody's. There is absolute record levels. And it's true that some of our competitors because they're not with Ocado being able to expand capacity faster than us. But why haven't we done a Chop Chop, Steve?

Well, Archie, I have to tell you the food team did a fantastic job in responding. Not only did they make sure we had supply of the essential merchandise. This fundamentally had to change our offer. We have a food offer, which is based around convenience and sandwiches, which, of course, all declined immediately and moved very much more to scratch cooking. They reacted instantly. And where we were behind the food business in the U.K. and the deliveries, we're now ahead.

What about Chop Chop?

Well, secondly, we don't have the facilities or the structure to do in-store pick. That's why we partnered with Ocado.

In-store pick, it means you pick it out of the store to...

Absolutely, absolutely. So the first thing the team did was put together food boxes. And we've sold over 100,000 of these. And they did that within 2 weeks, making sure we gave them to the shielded customers [indiscernible].

And these are the fruit boxes, the ready meal boxes?

We've got ready meals, fruit, we've got groceries one, we've got a [indiscernible] prepared meals one. It's actually a fantastic range. And the customers have been really quite grateful about our response here. And then more recently, we've had a limited partnership with ourselves and BP and Deliveroo. And that is really a short stop until we get into Ocado. So I think we have...

You order an M&S product through Deliveroo? [indiscernible].

Absolutely. At the moment, you can. And they will deliver it to you within the timeframe they suggested, half an hour. So I think we have responded as we can. But again, it shows the importance of that Ocado transformation. The other thing I would say, we did try and make sure that those customers that are vulnerable and shielded could access our foods. We were the first retailer to introduce a volunteered gift card. So those helping people assured you could come into our stores and get food and do the grocery shop.

So Jennifer, I hope that answers part of your question. We have responded. We can't do exactly what Sainsbury's and other people are doing. But I think the team has done a great job, and you'll see more of that in the future. Okay. So back to the pre questions, I think we'll move to Womenswear. Womenswear in a sense is the heart of the heart of M&S. And quite rightly, we've got some -- a lot of questions around the womenswear range. What are we doing? Is it making progress. So I'm going to take one from Margaret Taylor. Margaret asks, "Please consider cutting the number of your womenswear fashion lines and concentrate on what sells best. It's too confusing in-store." I love this question, Steve, because it's actually on the nail. It's very much what I've -- and I think you've been saying for some time. And we think we are making some progress. Tell us a bit about it.

Well, it's unfortunate that Margaret couldn't actually come into the stores because we've been rather shut to see the progress we've made. We have talked about this over a number of AGMs, and it's something that we've been really focused on. [ Jill ] [indiscernible] and the team, I think, have made really good progress. And you will have seen, if you came in today, a substantial reduction in the number of lines, about 12%. But we said things will never be the same again. And the absolute focus on core merchandise that team has got. As women -- when we get to the autumn of this year, we'll have done exactly what Margaret says. There'll be 30% less Womenswear lines than there were 2 years ago, no duplication. And what's important, it means we'll be buying in bigger volumes, greater depth. And it means we've been able to improve the values because of that.