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

Good morning, everybody. At least my team are awake. Good morning, and welcome to Waterside House. It's great to see so many people here in person after such a long time. What's also great is to see how many suits there are in the room. Tailoring is dead. Well, here's the evidence to say the difference. I'm not sure what the collective noun for a group of suits is nowadays. Thank you for taking the time to come to the support center. I think as you came in, you would have seen that it's humming with activity. And frankly, it has been now for some time. We've got differential working ratios. But the vast majority of our teams are back with very clear working patterns, and they have been now since we're allowed to reopen. Today is an opportunity for everybody to learn a little bit more about our strategic priorities and where we are in our transformation and importantly, to dig a little bit deeper perhaps into those plans with the team. We've set aside some time later in the agenda for you to meet the wider leadership team. But in terms of the presentation today, we'll be joined and led by Katie Bickerstaffe, who's Chief Operating Officer, looking after Clothing & Home, international and digital data; Stuart Machin, who is the Chief Operating, looking after food, retail and Ireland; and Eoin, strategy transformation, of course, CFO. Now about 2 years ago, almost exactly 2 years ago to the day, we met in this very room, and I talked about where we were on the change program, where we were in terms of fixing the basics of the business that had been ignored probably for too long, with a real sense of urgency but pragmatism. I outlined 9 transformation priorities that the business faced, and we scored them. And we were clear about our progress, words and all. Now there were plenty of positives. I think on the chart at the time, there were more greens than reds. I also had to tell you that we were probably 18 months behind where I'd expect us to be on Clothing & Home. Today, I think we're in a very different place. Now that does not, by any mean, mean that I think we have finished and there aren't jobs to do. There are plenty of jobs to do. We've got a long way to travel to make sure our transformation is complete. But through the Never The Same Again program, which we kicked off during the pandemic, we accelerated many of the changes that were in the plan, and we delivered against many of those initial milestones. And I think we've gone further and faster in our transformation than perhaps we originally thought we would. I said in the summer that I believe we had passed an inflection point in our transformation, that we were ready to move on to the next stage of our delivery, shaping the M&S for the future and delivering our plans for growth. Now we've continued to deliver against a clear set of priorities, and the team will outline those shortly. And it's important that you recognize, it is a team. This business is led by strong, focused and highly talented group of individuals who are very clear on what they need to deliver. What have we done that means we think we can move on to that next phase? Well, let's outline some of the progress over the last couple of years. Firstly and importantly, we simplified the structure in the business and gave greater accountability to the leaders of our family of businesses, clear P&L accountability, streamlined the central matrix structure and, in doing so, have delivered cost savings over the last few years of circa GBP 350 million. We've increased our digital and data capability in every area of the business, huge focus on relieving ourselves as the mainframe that burdened us for so long. We've built a data engine that now holds the data of more than 13 million customers. We've moved everything to the cloud, basically Microsoft, who have become our partners in technical delivery. And you'll find that digital tools are in every part of the organization. We've made great progress on value and contemporary styling in Clothing & Home. You'll see that later on when Katie and Richard outline our plans. We've increased the number of good price points everywhere; and as we've talked about for many years, cut the number of lines, brought deeper improved availability, and most importantly, cut the stock into sale, that terminal stock, and the number of promotions that the business was using. We've outperformed in Foods consistently, shifted to trusted value, continued to innovate, focused on families. And of course, importantly, we changed our operation with that 50% investment in Ocado Retail. In terms of the operation, well, across the piece, we've simplified our networks. We've fixed Donington. And Vangarde, our efficiency program in Food, is rolling through the chain effectively. We also added Milton Keynes as a capability in our food network to expand our capability. And finally, and most importantly, we've accelerated our store churn program, closed over 50 full-line stores. We've added a renewal format, which is working well. And as you'll hear, we moved on with our asset management capability. Now we're going to give you a full update of trading, of course, on the 10th of November. But with the headlines at the moment, I thought it was worth me outlining some of the context of what's going on and what the environment we're operating in. The first thing is there are a number of positives. Consumer confidence is recovering. We can see that in every area of the business. And overall, household finances are solid, particularly within our customer base. We can tell that customers are looking forward to a social and happy Christmas after last year's last-minute kibosh. And they're trusting M&S to be part of that to make it special, to make it different through our products and our gifts. But the issues we outlined in August are still very much in play. There is substantial uncertainty about the strength of that consumer demand as we go forward. There's substantial uncertainty about working patterns about how and where customers will shop in the short term and how many of those trends are here forever or simply for a brief moment in time. There are considerable disruptions still within our supply chain, creating additional costs. We've talked a lot about Brexit. There are COVID restrictions across the globe, imbalances in container locations. And in Clothing & Home specifically, there are some markets and some supply bases which still have very tight COVID restrictions and limits to movement of labor and goods. Now our actions here have been pragmatic and straightforward. We are prioritizing our shipments to make sure we get the goods we want in the right order as close to the right time as we can. We're using airfreight wherever it's appropriate. And we're adjusting our planning and our movement of merchandise in the U.K. In the U.K. food supply chain, again, well documented, there are labor issues both in terms of manufacturing and, of course, drivers. And there are significant changes to the input costs, whether that be CO2 or, again, raw materials. Here again, our actions are straightforward. We've adjusted our delivery schedules and planned with our suppliers differential trade fields, and if necessary, movement by rail. And it's the long-term partnerships with our suppliers that I think stand us in good stead at these difficult times. We can work with them to respond quickly based on years of trusted relationship. As we roll forward, there's still further complexity coming with the EU border issues, have not gone away. Lengthy and complex administration processes are a burden on cost and administration, and particularly impacting the island of Ireland. We said again in the summer that we would work with our partners on the impacts in France, and we announced recently that we have restructured our French business. But the energies of this team and of everyone in the organization now are focused on trading peak, making sure we're in the right shape as we move into quarter 3 and then beyond on a number of long-term efficiency programs. I can tell you, despite that list of headwinds, we face into them with a degree of confidence. I think the business has demonstrated over the last 18 months and beyond that we can be resilient, move quickly to make changes and adapt to the trading conditions we see in front of us. And we do have a plan. And we'll update you on our thoughts on the balance of the year when we do our trading statement next month. What you'll hear today from the team is quite straightforward, 2 years on, how our plan has matured, has a clear, focused plan to shape the future of the business. You're going to hear from Stuart and his team his phrase: protecting the magic of the quality and innovation of our food offer, whilst modernizing the rest, driving efficiencies in the supply chain, making sure we have a trusted value at every occasion, modernizing our stores and operations across the whole of the business. Katie is leading today's session on Clothing & Home. And she will talk about, with Richard, how we're going to build a leading global model, a product engine built by Richard and the team, great M&S own-brand products, but with some brands additionally as we develop our platform on MS2 and using that product engine to deliver MS2 and the new reshaped business of the future. And finally, Eoin is going to come to summarize where we are with the transformation projects and put those group strategic priorities and recap on our financial priorities, too. Before we move into that though, I did want to comment on Plan A, as we announced some changes to Plan A last week. It's a fundamental thing for this business. And we were the first retailer to become carbon-neutral back in 2014. Plan A, because we genuinely believe there is no Plan B. And you can see that now. Carbon dioxide concentration is the highest it's been for at least 2 million years. And there are more global days over 50 degrees centigrade this year than in the 1980s by a factor of 2.5x. We outlined a plan to become carbon-neutral Scope 3 by 2040. But importantly, we didn't just chuck a long day out and kick it down the road. We've set ambitious targets to make sure we reduce our carbon emissions now with this leadership team taking ownership for those targets in the short term. And by the way, when I say targets, that's because they're not greenwash. These are science-based targets with a full understanding of our carbon footprint. Now we're planning a separate focused event for you in the near future to go through this in some detail because I know it's important to many of you. I wanted to bring you -- tell you that it's fundamental to every single business area plan. But today, we wanted to concentrate on the strategic priorities we've already outlined. So this morning's agenda, fairly straightforward, as I've outlined. We're going to run through the food and store operation side of the business first with Stuart. Short break for coffee. We'll come back and look at the Clothing & Home, MS2 and international operations with Katie and the team. And importantly, importantly, there's time at lunch for you to meet and question the wider leadership team, and we welcome you to stay. We are intending to finish the meeting by 1:00, depending on how well -- how the questions go. But I think you'll have a very enjoyable morning. Thank you very much. Over to you, Stuart.

Thank you. Good morning, everyone. Just carrying on the suit theme. Steve walked in this morning and said, "Stuart, wow, you look so smart. You should wear a suit more often because actually, we've made an effort, whether it's M&S or Jaeger, so you get the chance of who wore it best by the time we do lunch later on." Just to introduce myself for those I haven't met, I'm Stuart. I'm joint COO with my partner in crime over there, Katie, who you'll hear from later. And then just to touch on the areas of my responsibility first and a few comments on each of these areas because under my responsibility, I have store and central operations technology, our people plan, island of Ireland, property and store development and, of course, the Food business where I've been Managing Director for the last 3.5 years. Touching on our stores and central operations first. I mean, we have a very ambitious transformation plan across our store operations centrally and in the field. It's all focused around efficiency, but more importantly, about great service and, of course, great shopkeeping standards across Clothing & Home and our Food business as well. In technology, the transformation plan is really, really important to the overall transformation of the M&S plan. And I think when we look at the investment in technology, we know this is one of the most important programs of these next few years, and that enables everything that the businesses are trying to deliver. In our people plan, we have a team of people in M&S of over 60,000 colleagues. And we think it's never been more important than it is today to focus on our people, our colleagues across the whole business at the very heart of our transformation. So we're putting real focus on how we recruit and also how we retain great talent throughout the whole of M&S. We have an ambitious people plan, helping everyone be themselves but also be their very best in the organization. We've relaunched our performance management program, and we are relaunching all of our talent, training and development programs. So we focus on the leaders for today but also the leaders for the future. And Sarah, who runs a large chunk of our people plan, is here at lunchtime, so she can talk to you about some of the plans in place. Steve touched on the challenges of island of Ireland, but we see this also as a huge opportunity. So actually, under Sacha's leadership, in addition to his current responsibilities, Sacha is looking after and leading our transformation in Northern Ireland and the Republic of Ireland, and we brought this into one plan under island of Ireland. I think one of the most exciting but challenging programs in our transformation is, of course, our property and store development plan. You know we have an aging store estate. We've made great progress over the last 3 years. And we have a clear long-term plan when it comes to our network of stores across Clothing & Home and Food. But our focus is store rotation. And you're going to hear more from Sacha later who's in the room today, and Sacha's at lunch with us as well for questions and breaks. And of course, our Food business. I've been really fortunate to run our Food business now for 3.5 years, and we're going to concentrate on today's discussion with some of the leadership team and I on the progress and the opportunities in the future to build a bigger, better, fresher Food business. So I think the last time we spoke around 2 years ago, I shared our strategy, we call this our storefront. And we talked about protecting the magic and modernizing the rest. And that phrase has caught on. And everybody throughout the organization when they refer to our Food business talk about our strategy under this protect the magic and modernize the rest. We shared our transformation plans, and very much those have been the transformation plans that have stayed and remained in place for the journey of the 3 years. When we last spoke 2 years ago, I talked about how we needed to improve our value perception. And we've done this through our Remarksable campaign and other value initiatives. In fact, our value perception has never been as high as it is today when you look back over the past 5 years. 2 years ago, we spoke about modernizing our supply chain, and we're well on the journey with much more to do. But we'll talk about Vangarde, one of our programs which we've already launched to 80% of our store estate. But also now, we're investing in space, range and display systems and, critically important, our forecast ordering and allocation system. 2 years ago, we spoke about not being online and having to embrace a more digital and data world. And now we have our joint venture with Ocado, and we're also embracing digital and data in everything we do. And we're growing our M&S.com, our floral, our gifting and our wine business. And 2 years ago, we said we needed a lower-cost program to offset the challenging headwinds and invest in price. And we've taken out GBP 180 million across our Food business in the past 3 years in order to do just that. So we've made good progress, but so much more opportunity for future years. And supported with George today, who runs all of our commercial in our Food business; Sharry, who runs our customer and marketing team; and Sacha across property and island of Ireland, we'll share some of the progress for actions we're taking. But of course, we need to also acknowledge some of the things that Steve spoke about, the context of the past 18 months and the changes as well as the challenges that we've been facing. Last time we spoke, we shared -- sorry, my notes go back. We spoke about growing the business. And I just need to move that one slide on, [ Sharon ]. And if you look at the 19 weeks that we last presented, our sales were up 9.6% on 2019 and '20. But the way people are shopping has changed. And actually, some of this over the past year or so through the pandemic has been actually really good for our Food business. We've grown bigger baskets. In fact, our baskets over GBP 30 has grown significantly, nearly double pre-pandemic levels. 15% of our transactions are now on baskets GBP 30 or greater. We've also grown in our target group of families. Our families now account for 13% of our grocery sales, and that's significantly up on 2019. But of course, it hasn't been without its challenges, and the pandemic has actually left some issues for us to tackle in this coming 12 months. We were heavily impacted in our franchise business, with most of our stores on rail or road or air closed. We know we were heavily impacted in our high streets. And of course, in our hospitality business, we remain down, trading down around 35%. But it's not just the customer behavior where we see those challenges. We've also had other strong headwinds. A lot of these are shared by the whole industry, of course, but it's been a pretty challenging period: the broader challenges with island of Ireland; the costs of Brexit; the uncertainty of what COVID will bring over these coming few months into Christmas and into next year; the challenges that Steve referenced at the very start across our supply chain but also in our supply base, where we're actually tracking every single supplier and every single vacancy in our supply chain. We know the driver shortages have presented challenges, and we're working hard on our plan to resolve that with our partners in Gist. But also other things like the recent CO2 issues, and therefore, the challenge when it comes to increasing price. In the face of all of these challenges, I think that just gives us an even bigger opportunity to be laser-focused on our strategy but also our implementation. We need to mitigate the risks, keep really close to the detail. And also, with our suppliers, our supply chain partners, we recognize that we're all in it together, and George will bring this more to life in his sessions today. So you can see 2 years on, there's been substantial change but also opportunities for growth. That's why we talk about protecting the magic and keep focused on how we're going to keep the magic of M&S Food but also keep modernizing our business. And there's significant activity behind all of these programs. So moving to protect the magic and reminding you what that really means for us. This is a phrase that I said has caught on throughout the whole organization, but it really is about our obsession with product, the focus we take on our product innovation, the quality, the differentiation in our range and the unrivaled value that we want to present. In fact, just early this morning, my team in product development with the chefs were downstairs looking at fresh meat and sausages. And we had a tasting session, critiquing everybody's sausage range and our sausage range for next year. I mean, product is at the very heart, I think, of M&S as a whole. We are a product company, and without great quality product, we don't have a business. We do this in various ways. Firstly, we choose to be an own-label retailer, not a house of brands. That gives us direct control and influence on our product. It helps us tailor our product to our customer needs and gives us that advantage when it comes to quality control. It helps us when it comes to the provenance of our ingredients towards the recipe, our technical specifications, the production methods we use in our manufacturing and the packaging we use. It helps us drive innovation and differentiation, but not around the fringes, not on niche areas, but center of the plate and on what products that customers buy most. And in M&S, we talk about not just buying products but creating products. That's why in the past 12 months, we've introduced 1,500 new products mainly around seasonal events, like this Christmas. And hopefully, in your goody bag when you go, you'll have our Christmas brochure and also an update on all of our marketing over the past 12 months. Examples of this product was our collection launch when we did Master Grill this summer or our Classic wines or Found wines in our wine category or our British Select Honey from Select Farms. We have over 1,000 hives. And I spent a few hours with David, our beekeeper, who's been our beekeeper for 12 years, who absolutely loves this passion for honey. And every jar of honey you buy in our Select Farm range is unique and different. So differentiation and focus on quality is at the very heart of what we do. That's why we also introduced an innovation hub earlier this year so we can keep leading the market. Because one thing I know is everybody copies us very, very quickly, and it's very frustrating, so we need to lead but always be ahead. But also really important to us, that part of quality is being very selective about our range, curating our core range of only 7,500 SKUs and not letting range creep slip in. That's less, of course, than the big-box supermarkets. It's slightly more than the discounters. But actually having 7,500 SKUs gives us that opportunity to focus on quality, to focus on innovation and to be obsessed with every product that we range. It makes us work deeper, more collaboratively in partnership with our supply base. It enables both partners to invest in quality, differentiation but also reducing our cost of goods. In fact, we're seeing some positive feedback from our supply partners. This week, we've just had our annual Advantage survey back. And we've moved for the first time in many years to second position when it comes to feedback from our suppliers and our ways of working. So a curated range means we need to focus carefully on our category management. Every SKU plays a significant role in our category and in our overall offer and choice for customers. Critically, we need to drive volume. And that's one of the big changes we've made in our strategy, being more of a volume retailer. And we know we can't afford a long tail of slow-selling lines. The lines we take out are just as important as the lines we introduce. And George is going to cover this but also another element of what we call protect the magic, which is trusted value. People often refer to value, and for us, it's slightly more complex. If you're an everyday low-price retailer, it's very clear what you stand for when it comes to value. But actually, that complex balance between price and quality and those other less tangible factors such as brand equity, range choice, environmental impact or the quality of the packaging is really important because for the customer, the equation is quite complex. No customer stands at the shelf, looks at a product and a price and scores you in terms of that value equation. But instead, customers choose products or retailers, and that make that instinctive a more emotional decision, that deep-down belief that those trade-offs between these metrics are right for them as an individual or right for their family. That's why in M&S, we talk about trusted value and great prices every day. On price, we're carefully investing in price and have done over the past 2-plus years, very much focused around the products people buy most. We do have targeted promotions but very different from where we were 3 years ago, heavily reliant on multi-buys and mix-and-match promotions. We don't want tricksy promotions. We want every day great quality, every day great prices, with a few targeted promotions where it's very relevant for our customers. And on quality, we can't afford to be beaten, and we need to raise the bar every day. And we'd have challenges around every product every day where we're constantly benchmarking our quality to constantly raise the bar on quality. As I said, without quality and great products, we don't have a business. But it's not just price and quality when it comes to trusted value. It's the other things, the lengths we go to like leading standards on animal welfare, how we partner with our farmers, our program when it comes to reducing packaging or plastic or our commitments to the environment or net zero. And the magic also needs to have that emotional connection with our customers. And we refer to this -- in fact, that's David, our beekeeper. We've referred to this as a loved and trusted brand. How we communicate with our customers on a more emotional level is really important. We need to talk about our heritage, our quality, our value and build trust. And relying on past glories is not enough in itself. We need to constantly drive our communication, evolve our brand and communicate to our customers so we remain and continue to be Britain's most trusted brand. So that's a quick summary of introducing protecting the magic. It's about product and our own label advantage. It's about a focused curative, targeted range, careful category management, trusted value and bringing together that communication, which I know Sharry is going to talk about shortly, which is about how we communicate this trust and our brand. So let me hand over to George, who is in person, who's going to give us a bit more detail on category management and trusted value. And then we'll hear from Sharry, who runs our marketing.

Thank you, Stuart. Cheers. Good morning. Thank you. My name is George Wright. I'm the Commercial Director for Food, so I look after trading and the supply chain. What I wanted to do today was -- as Stuart talked about, is bring to life 2 elements of our shopfront strategy: transform categories and delivering trusted value. But to do that, I want to actually go back to -- I've been with M&S 2.5 years. And 2 years ago, when I first spoke to you, we talked about the opportunity to be more relevant to more people more often. We have a strong market share in small baskets, strong in some of our heartland areas like ready meals, like food on the move, Christmas treats, but actually big opportunities with families, with everyday categories. And we saw that in also particularly mid and large baskets. So we saw this as the key opportunity. And these 2 strategies were fundamentally aimed at driving our share in those areas. So I'm going to bring that to life through a couple of examples. When we talk about transform categories, what's the difference between transformation and reset? Transformation is about leading on quality. Our obsession, core to our proposition, what we define is that we have the best quality and best value product in every category and at every tier. That's our obsession. That's the thing -- whenever we do any category review, that's the thing we look for. To bring this to life, what we also then do is look at that representation of that quality in the various tiers in the market. And we split the market into 4 tiers. So we start with the good tier -- or the value tier at the bottom. That's typically where you see the discounters, the likes of Tesco with their exclusive ranges. We don't play in that space because the quality standards, the animal welfare standards and the technical standards are different from what we would push for Marks & Spencer. Where we come in is in the mid-tier and the good tier where we compete with the likes of Tesco, Essential Waitrose and the Sainsbury's own-label brands. Then we step up into our heartland area, the more premium sector, the better tier. And that's where we're competing with the likes of Waitrose, the likes of Taste The Difference, with the likes of Tesco's Finest. And last but not least, what we call the best tier or the affordable luxury tier. This is actually a rapidly growing segment of the market that we've really driven. And this is where we compete with the likes of Waitrose 1 all the way up to Fortnum & Mason and Harrods. And we're seeing particular strength in our own -- our best-ever brands and our collection brands. So what we're doing to do in each category transformation is to lead on quality and then position our range and price against these 4 tiers. But the best way for me to illustrate that is to take you through an example. And 2 years ago, I talked about dried pasta as being one of the most important markets. It's in the grocery market where we had a heavy opportunity to trade up, but it was also an area where we were underrepresented in terms of our range. The first thing, again, I come back to is, what is our quality point of leadership? Now all of our pasta is made in Italy. But one of our most valued partners, the Felicettis, they're fourth-generation Italian family. They're located in the north of Italy, near the dolomites, where the water and the air is pure and all of the pasta is air-dried. And we use a durum wheat, so an authentic Italian durum wheat to make all of our pasta. So that's our quality point of difference that runs all the way through our range. But what we also saw is we were represented in good at 500 grams and at 55p. We were represented the better where we probably had too many lines, 18 lines at GBP 1.50, but we didn't have a best tier. We didn't have a top tier, the best product in the market. So we repositioned the range. And what we do is we differentiate the quality based on ingredients, process, recipe or packaging. So on those 4 parameters, we look to lead the market. So in this case, in the good tier, we have an Italian durum wheat pasta. As I said, it's air-dried. It's produced by the Felicettis with fantastic quality. What we have done is introduced the 1 kilogram bag because that's more relevant for families. Then we stepped up. So this is where we've got a bespoke, exclusive to us, Italian durum wheat, makes the best pasta. What we also do though is we slow the process down because we bronze, dye, extrude the dough. And what that does is it roughens the surface so you get better sauce pickup of the pasta. We also introduced a first-to-market paper and bag to put the package in it. And then last but not least, we introduced our top-tier range. This is a single origin durum wheat semolina with a beautiful packaging. I think you saw the picture from Stuart earlier. And that is the best product on the market today. That GBP 2.50 actually represents fantastic value. So that's how we reposition our quality. That's how we reposition our range and price when we talk about transforming categories. Now this is a key market because pretty much everybody eats pasta. The effect of that is we've grown our market share by 1/3, and the number of repeat customers has gone up by 66%. So that's one example, and it was an example I shared with you 2 years ago, but we've been doing this all across the categories. So in India, and actually one of our core heartland areas, what we saw was in the good section of the market, the mid-market, we didn't actually have meals for one. It's the largest part of the market, so we established that serves one. Again, our authentic recipes, our authentic ingredients, we established a new range down there. On wine, I mean, we destroyed a lot of our wine credentials with what we put in the dine-in. We repositioned that. We took wine out of the dine-in. We launched the new GBP 5 range. But what we also did was launched the Classics range, 36 new and old world wines between GBP 7 and GBP 12. Each one of them for that grade, for that variety, for that region, the best value, best quality representation in the market. And we're following that up later in this financial year with our new premium range. And then in our roast and ground coffee, our leadership is we're the only roast and ground that is all A grade specialty across the entire range. But we've broadened -- the coffee market has premiumized. We've broadened the premium sector to 13 lines. And we've introduced 2 lines at GBP 15, which is a -- specially selected. It's exclusive to us, and it's from particular co-ops. It's the best quality in the market at GBP 5. I'd strongly recommend it. So we're applying this logic across all of our categories, applying that passion to leading on quality across all of them. Then the pattern is the same. Our market share increases, and the number of repeat purchases increases. And this is our approach. When we talk about transforming categories, this is what we are driving at. This is what's driving those mid and large baskets. But we're not just looking at these areas where we historically had big opportunities, even in our core heartland areas in events and gifting. When we talk about affordable luxury, we see this as a massive opportunity. 2 years ago, I think I talked to you about our gin globe. And we were quite excited that we bought about 100,000 of them. We've added a second one last year, then we put in a light. And this year, we added a third one, and actually, we've got a magnum, which is light, sound and music. We're now driving over 3 million of them this year. They're already selling like hotcakes, right? So what we're doing is we're taking that affordable luxury. We're taking it to the market, and it's getting great traction. The next one on there is the next big thing. This is the light-up Magic & Sparkle box. It's a beautiful selection of chocolates in a light-up box. This is going to be the next gin globe. This is the first to market for us this year. We've bought over 400,000. The significance of this from an economic point of view, our Christmas buy this year is 25% up on value, 7% up on volume. And what we've done is actually we've bought less lines, but we've backed all of these lines. These -- we bought these in significant quantities. We're now buying in hundreds of thousands and millions, right? And it's also at a higher margin, right? So this is the economic model. As well, it reinforces that attention to detail on quality. So one of the things that then comes to, and we talked about transforming categories, going with that is about trusted value. And Stuart talked about it. It's about trust. We needed to address our value perception because the biggest piece of feedback in the research was that the reason people didn't shop with us was because they thought we were too expensive. Over the last 2 years, our value perception has improved faster than any other grocery retailer in the U.K. market. According to YouGov, we have moved 8 points. On average, everybody else has moved 3. We've done that at a time when we've removed -- we stopped promoting with a machine gun, right? We've actually stripped out a lot of the promotions. Our promotional participation was running at 26%. We've more than half that over the 2 years. We're now running at below 13% and falling. And you can see that our growth is coming from a full-price, full-margin sales rather than being overpromoted. How have we gone about that? There's 3 key levers to our value campaign. We've simplified it. We've got Remarksable value. We've got fresh market specials, which is our promotional vehicle, our principal promotional vehicle. And we've reset the dine-in because all of the research says the dine-in has a disproportionate effect on value perception. And I'm just going to take a couple of seconds to talk about each of those. Remarksable value is not a reduced quality, reduced specification entry tier. It is our products that we've been producing for many years to the same high standards, but we invested in price to a sharper price, not quite at the same level as the supermarket. It's at a slight premium, but in each case with a quality point of difference. And in every category, we look to differentiate and lead on quality, whether that be Scottish salmon, whether that be vitamin and fiber-enriched bread, whether that be RSPCA Assured milk, whether it be Select Farms in produce. In each case, we lead on quality at a sharp price, which reinforces that people can buy their top-up, their big baskets with us. And this is one of the anchors of our value strategy. These products are now 10% of our volume. So if that's the anchor, what's our promotional vehicle? So we talked about fresh market specials. When you walk into a shop, at the front, you'll find 4 produce lines in abundance, seasonally relevant, perhaps a different variety and at a sharp price. Because what we're saying is this is the place you come for quality, freshness, variety. What that's done is it's increased our penetration of fruit and veg. It's increased our fruits. It's increased our veg. It's increased our penetration with those occasional customers. They now shop with us more and buy more. Fresh market specials appears in 6% of our baskets. And then last but not least was the repositioning of the dine-in. 2 years ago, the dine-in was a collection of products from across the store that may or may not have fit together well, coupled with, frankly, quite a poor bottle of wine. I refer to it as Frankenstein's dine-in. What we said was, okay, we're going to reposition it. We're going to bring it back to what is it that customers want. First off, we're going to get off the drag at a single price point. So now we repositioned it. It's anywhere between GBP 10 and GBP 20. For GBP 10, we took the wine out because you don't need to buy the dine-in to get great value wine. At M&S, the Classics has done that. So what we did is we upgraded the food to our premium quality, restaurant-grade Gastropub range, serves to GBP 10. The second thing we did was we said, well, there are other special occasions where actually, we will upgrade and maybe we'll put a really nice bottle of wine or prosecco. And so GBP 15 at New Year, GBP 20 at Valentine's. You're going to charm the pants off someone, GBP 10 is not going to cut it, right? And then, of course, last but not least, we needed to be more relevant to families. So we introduced the family dine-in, serves 4, GBP 15. We've done an Italian. We have done pizza. We've done chicken chop. We've done American. It's basically an alternative to take-away, and it's alternative to go out to a restaurant. By repositioning the dine-in, in this way, we've increased our sales. We've increased our profitability, and we've doubled the number of families that shop with us. So in summary, we talked about being more relevant, more often to more people. We do that. When we talk about transform categories, it's that combination of leading on quality and then positioning our range and price to support every mission, and then couple that with an approach to trusted value which is about simplicity, consistency and customer relevance and taken out the promotions. As a result of that, we have seen our families grow from -- we're growing from 1.9% to 2.2% of the family market. Significantly, we're still growing our heartland small baskets, but we've seen more of our growth in medium and large baskets. Our large baskets particularly have grown by 50% market share, 50% share. That's particularly important because medium and large baskets are 3x the size of small baskets in the market. Our total market share has gone from 3.1% to 3.3%. But what you can also see on the right-hand side there is that in all of those core basket staple categories, all of those things that underpin families, mid and large baskets have grown significantly. So in terms of the success of it, I'll let you judge for yourself. That's everything from me. I look forward to seeing you at lunch. And we're happy to take any questions that we have. Of course, critical to this, as Stuart talked about, is not only having these step-forwards in terms of our ranges and our price, but it being reinforced in our brand values and our advertising. And I'm pleased to say that I think not only do we lead on quality and do we lead on trust, but we lead the market on our brands comms and our marketing campaigns. And with that, I'm going to introduce my colleague, Sharry Cramond, one of the Scottish mafia at M&S. But she's allowed me to introduce one of her videos for once. So I'm going to hand over by saying, roll VT. Thank you.

Thank you, George, and welcome, everyone. Now when I spoke to you 2 years ago, I talked about the customer perception challenges the M&S Food brand faced. First of all, customers would tell us that they saw us for sandwiches, ready meals, special occasions, but not for their weekly shop. Secondly, customers said they thought we were more expensive than we actually are. We haven't been communicating our value effectively. Third, we thought we lacked relevancy. Customers that actually say M&S Food is for my nan but not for me. Fourth, we had some amazing stories about the way we created and sourced our products, about our farmers and our suppliers, that these stories just weren't known or understood. And fifth, although we had a fantastic group of own brands like Gastropub, Percy Pig, Colin the Caterpillar, they all had untapped potential. Now we've been busy over the past 2 years, and our marketing has been focused on changing customer perceptions, building that emotional connection, which Stuart referenced, and communicating the changes we've been making as a business. Let's have a look at what we've been up to. [Presentation]

And all that work from everyone in the Food group, from our marketing team, to our buyers, to our stores and everyone in between. Well, this has led to real positive change for our Food business. There's lots more to do on the transformation journey. But the key metrics, as measured independently by YouGov, well, they're all moving in the right direction. We've seen a real step-on in value perception, and customers see us as better value for money than they did previously. We have maintained, and, in fact, we have grown our leadership in quality perception across the market. And we are leading the market on a new metric we started tracking, high standards in farming. We know this is vital for our customers. Our Buzz, which is how much customers talk about us, is consistently strong. Our activity is getting the nation talking. Most crucially, our purchase intent is up and, in fact, is the highest it's been for 2 years. Customers' intentions to shop with us are clearer than ever, and it's paying off. Customers want to shop with us. We have gained real momentum and made some great progress with our transformation strategy. We have lots to do, but we also have lots to celebrate as we continue to evolve our loved and trusted brand here at M&S Food. I truly think I've got the best job in the world, leading most definitely not just any marketing team. And with that, I'll hand over to Stuart.

Thank you, George and Sharry. Not just any update. So that's around protecting the magic and a bit more detail explaining what we've done and what we're going to do. But actually, modernizing the rest, modernizing our business is just as important. And I just want us to bring that to life for the final part of our session today. Actually, property, rotating our estate is one of those key programs, and we've discussed that with you over the previous few years. And that's critically important across Clothing & Home and Food: having the right stores in the right places, giving the best customer shopping experience; investing in new stores, where we're confident we will get strong returns now and in the future; facing into those difficult decisions of closing stores, those stores not economically viable for today or in the future; and very much focused on our asset management program, which you've already heard about, example being Marble Arch. And bringing all that together, we call that our store rotation program. But how we fill that space is also just as important. And that's why we're investing in store renewal, that new experience for our customers, where we want to differentiate that shopping experience from our competition. But it's not just about store design. Renewal means renewing the whole operation and customer experience. It's not just store design. In Food, it's about marrying the soul of a fresh market with the mind of a supermarket. And already, we have 28 Food renewal stores. We're pleased with the customer feedback and we're pleased with the performance in those stores, and we're already looking at our next -- our first Clothing & Home renewal store. So Sacha is in the room, but he's also on video. So I'll hand over to Sacha, who's in Sears Solihull, who will give you another update on what we're doing with our store estate.

Thanks, Stuart, and good morning to everyone. Our stores remain our key sales channel and primary means of engaging our customers in our Food business. Under a huge advantage in our omnichannel Clothing & Home business, we have an opportunity to grow our Food business to larger, more operationally efficient stores that showcase the broader product offering that George has already spoken to you about. In our Clothing & Home business, some of the full-line estate is old, poorly located and unable to effectively serve the needs of a modern customer base. Rotation, funded by asset management, will allow us to move to a more profitable store base position in growing markets. Now I'm here in Sears at Solihull, which demonstrates the opportunity in both businesses. We've relocated out of the Town Center, which had declining like-for-like sales. And we've extended the Sears Retail Park Food store to double its size and also added 45,000 square foot to our Clothing & Home space there. Despite reducing the Food space across the 2 stores by 34%, sales are up on '19/'20 and recent trading. And on Clothing & Home, sales are 15% up on the 19/'20 levels of the town center on exactly the same amount of space. However, it's not just about sales. Keeping ahead of channel shift and cost inflation with an efficient retail operation is really key to our profitability. This is being achieved by investment in-store technology alongside operational improvements as part of our renewal program. And when I stood in front of you 2 years ago, I spoke about the strategic partnership we have with Microsoft and how we would use Teams as a platform as our ecosystem for the future. This partnership is thriving, and it enables us to have direct access to the newest features as well as giving feedback and input on the functionality we'd like to see in the future. This new integrated technology accessible from colleagues' handheld devices frees up their time and enables a much more efficient operation and allows us to focus more on customer service. For example, integrating our renewed people systems within Teams means our colleagues can effectively manage their working patterns through their handheld device and they longer need to go backstage to do that. Colleagues in our renewal stores are also connected through headsets, which enable managers to stay close to their operations. In our food stores, renewal aims to create larger stores with the efficiency of the supermarket and the soul of the fresh food market. It's a concept that we're rolling out in selected stores in our existing estate and new stores alike. We work within 3 formats through investment in existing stores: basic, light and full renewal. Clapham Junction is an example of a full renewal. As well as a better shopping environment, renewals include efficient improvements such as pullout bakery shelves to increase the speed of replenishment, intensification of shelf space supporting our Vangarde supply chain model and digital screens for ordering in our cafes as well as self-serve coffee machines to reduce labor requirements while still offering fantastic, fresh coffee. In our Clothing & Home business, we've also made changes to create a truly seamless omnichannel experience for our customers. We're rolling out changes to click and collect with customers putting their details into a digital screen, and we're achieving parcel collection times of under a minute, and our customers absolutely love it. And there's a new app for colleagues that's enabled in-store fulfillment for online orders that have been collected in-store. The app will show availability in that store to our colleagues. But if it can't be found after a few minutes, the request is automatically sent to another store, saving our colleagues wasted time looking for hard-to-find items. Now alongside renewal, rotation of our estate helps us maintain a profitable stores business and drive improved brand perception. In our Food business, a great example of this is Paisley in Scotland. In Paisley, our existing freehold high street store was 15,000 square foot Clothing & Home. It was an outlet store with an 11,000-square foot food hall, an offering that have been traded from that location in one form or another since 1931. It had no car parking facilities and declining like-for-likes. The case for relocation was clear. So we closed this site and moved to a food-only offering on a retail park just half a mile away on a 10-year lease. This new site has free car parking facilities and almost 30% more food trading space, and we're able to offer all existing colleagues a transfer to the new food hall or to another nearby store. Whilst it's still too soon to have a clear read on profitability, the revenue per foot has already exceeded our expectations by over 20% in the first 15 weeks since opening. As part of the wider rotation program, with the current environment providing great opportunities to relocate to new space on good terms, we have since May acquired former Debenhams sites and are seeing even more opportunities in the current market. As we said before, we plan to largely fund future closure costs through the disposal for redevelopment of freehold and long leasehold properties, including Marble Arch, and have a pipeline to deliver at least GBP 200 million of cash from this program. So thank you for listening. And that's it from me and [ Sharry ]. Back to you, Stuart.

Thank you, Sacha. I mean the property team are doing some fantastic work, and that's one part of our modernizing the rest across both businesses. But of course, we know we also have to think about digital and online and shopping needs have evolved in particular through the pandemic. We launched our joint venture with Ocado in September 2020, and it's reshaped our P&L. Greater volumes through our supply base, driving greater efficiencies for our suppliers and, of course, for us in better terms. More importantly, it's changed the game in terms of our customer base, attracting new customers who didn't shop with M&S or M&S customers switching to Ocado rather than other online competitors. So this is working for us today, but more importantly, this gives us significant opportunity for the future. More broadly, we're embracing a more data and digitally-led culture, maximizing our omnichannel capabilities, whether it's Sparks or our customer data engine, and you'll hear more about that with Katie and the team later today. But these, like property and renewal, these are more visible elements of our modernizing the rest program. there's so much more behind the scenes when it comes to our food transformation. And in particular, supply chain. And we've talked about supply chain for the past few years, and we have an overhauling of our supply chain of the future. We know we have a curated range. We need to be highly efficient. We know there are challenges, drivers, increased costs, and we know our network remains outdated. But we know we've got some big opportunities in the future. Like many people in the industry, the logistics costs are escalating, particularly around this summer, and that's forecasted to continue. And we need to change the way we operate. One of the programs we've spoken to you before that I mentioned at the start is Vangarde. Our Vangarde program completely reshapes our stock flow, our productivity and our ways of working in our stores. It helps us get the right stock at the right time to our customers, and it helps us improve our availability and reduce our waste. Last year, Vangarde was in 27% of our stores, 159 stores. Today, it's in 80% of our stores, 466, and we will complete that rollout next year by April. Also, it's really important to call out the systems overhaul centrally in our supply chain. I mentioned the new space range and display system. Actually, it's the first time we have store-specific planograms. Also our forecast ordering and allocation system, an overhaul over the next 24 months on how we order and supply our product. This is the last video of the session, but George is now in Vangarde to give you a bit more detail on the update regarding our supply chain.

For this part of the section, as you can see, I'm in a recently renewed Vangarde store in York, where our supply chain strategy really started 2 years ago. As many of you know, the M&S Food supply chain has some unique strategic challenges. We have a much higher proportion of fresh and shelf product, with over 60% having less than 10 days shelf life. Our business has very large peaks around key events such as Christmas and Easter. Our store network varies widely in size, location and access, which increases complexity and cost to serve. And of course, the logistics network is largely operated by a third-party provider. Tackling these challenges presents a great opportunity to improve our customer experience and availability, grow our sales and reduce waste and operating costs, making us much more resilient [ move ] to the current industry headwinds, but also to make us more competitive. We have worked really closely with Gist and our other supply partners and proactively seeking to mitigate the growing issues of driver, warehouse and supplier labor challenges. We've targeted investment in early rates and incentives across supply chain to remain competitive. We've improved truck, cage and tray fill, maximizing the utilization of critical resources. We've optimized delivery schedules and turnaround time at stores. And then finally, we've got a sharp focus on our productivity and optimize picking processes in the DCs. In short, we're not making excuses, and we're not just throwing money at the problem either. We're taking action. We're driving productivity, and we're facing into the challenges head on. With this backdrop, I wanted to update you on the 3 pillars of our supply chain strategy, which will address those strategic challenges I mentioned earlier. The first is our Vangarde operating model, which will be rolling out at pace despite inevitable disruption caused by the pandemic. Secondly, the planned overhaul of our systems, both in forecasting, ordering and allocation and space range and display. And finally, we've devised a full network strategy and began to build a modernized logistics network. Firstly, Vangarde. As you may remember, 2 years ago, we highlighted the changes we have made at our Vangarde store to deliver an improved operating model and a focus on backstage stock to improve efficiency in store and our operations backstage. It was about changes to inbound stock flow and therefore, processes to ensure the product is segregated for the stores prior to dispatch. It's about optimized delivery windows to ensure stores are ready to trade first thing in the morning. And then out of those fill process, supported by gap scans with real-time management information, we've gone live in 6 of the 8 show depots, and the rest are planned to be complete by the year-end. And we're pleased with the results to date. We've seen sales performance ahead of control stores by 2%. The number of stores ready to trade for opening times is at 70% now versus 4% prior to the program. This is particularly important as a lot of our loyal shoppers shop with us earlier in the month. Backstage stock has halved since we began the program, and our use of shelf-ready packaging has improved by 25%. And now 75% of our products go straight to the shelf, improving our efficiency massively. On systems and process. We've made excellent progress overhauling our forecasting ordering and allocation system. And alongside this, upgrading our space range and display operating system. These represent a major step forward in how we operate, ensuring that we are now one of the industry leaders in this space. The benefits of the forecast and order and allocation system are: significantly improved accuracy and consistency of forecast in our stores, in our depots and our suppliers; reduced in-store operating costs and replenishment costs; a 1% improvement in availability; and a 10% reduction of waste. The first tranche of products in the new OE system is going live in quarter 3, and then we'll begin our accelerated rollout program from early 2022. Our recent investment in improved SRD, or space range and display capabilities, can then also be fully exploited by linking our shelf space to demand more clearly, optimizing space, giving great presentation levels and ensuring the right range and the right planogram are specific to every store. Recent initiatives on this one have included: we've increased our shelf capacity on ambient by 7%; we've reduced our unused space on chill by 8%; it's also supported an improvement to 75% of products going straight on the shelf that I talked about earlier; and we've commenced the initial implementation of those store-specific planograms. So to summarize. We're now moving past the design and test space into the rollout and implementation phase of these industry-leading systems underpinning all the elements of our end-to-end operations from our suppliers, to our DCs, to the shelf edge. Today's logistics operation is complex and costly with over 20 DCs and RDCs, and many of which require investment to bring them up to modern standards. Our vision is to create a streamlined mode on optimally located network. As part of this, we've undergone a full review of all aspects of our DC network, including chilled, ambient, frozen as well as primary and secondary distribution. From this review, we have designed our future network around larger, more efficient sites with the increased capacity to support our growth, optimize labor and transport costs and incorporating leading-edge automation. In autumn 2020, to support the growth over the important peak period, and as we expanded particularly into larger baskets, we opened a new ambient depot at Milton Keynes, which successfully supported one of our best Christmas trading periods ever. We also expect to make further investments in the new chill capacity in the next year. While the last 18 months have been challenging, and the near term will be no different, we've driven real change over this time and we've come out stronger. As you've heard today, our vision is to build a modern, efficient network that supports our growth plans, industry-leading systems that optimize end-to-end operations from our factories all the way to the shelf edge. And ultimately, an operating model that delivers the best customer and store colleague experience in U.K. and retail.

Thank you, George. And alongside these investments, we know we need to drive efficiency, and I touched on our lowering cost program earlier. We never want to compromise on quality, but we need a ruthless focus on how we constantly reduced our COGS , our CapEx, our OpEx, and I know we have some way to go in how we drive that lower cost mentality throughout the organization. But we have achieved our cost savings of GBP 180 million over the past 2.5 years, and we know we have to continue to drive our lowering cost program so we offset inflationary headwinds. We can invest in price and deliver our margin. So of course, none of this will be possible if it wasn't through our people. And as I said in my 3.5 years, we now have built a really great leadership team and some of that team you've heard of today. Most of the food leadership team have been here now for 2.5 to nearly 3 years, and we're very committed to our transformation. We say we're probably about halfway through because we know there's so much opportunity in the years ahead. We've retained good talent at all levels throughout the business, but also we continue to attract great talent from across the food industry. That diversity of thinking, experience and background, we think will help us drive our performance short term, but also importantly, in the future. So to wrap up, modernizing the rest, we've touched on, with Sacha, our rotating store estate program. We talked about embracing online with our joint venture at m&s.com and the work we're doing on data and digital. Overhauling of our supply chain, a huge opportunity, and our Gist partners have been fantastic to work with over the last 18 months. We have a lowering cost program, and we have a remarkable, as we call it, Food team. And I often get asked, what is the priority? Is it protecting the magic? Or is it modernizing the rest? And in truth, the answer is both because both need to work in tandem to deliver our food transformation. In 2018, this was the slide that I shared internally and actually shared with this group in 2019. We spoke about our customer experience. We had a confusing experience in our stores, a room for improvement in our store standards. We over-indexed on small stores with actually only a dozen stores carrying our full 7,500 SKU range. We had no real presence online, and we weren't relevant to families or big shops. On our product, our competitors were catching up or taking over and our innovation was around the niche edges, not center of the plate. We had range proliferation. And we actually didn't have enough deep supplier relationships. Our value perception was poor. We were heavily reliant on complex promotions and no clear category management. In operations, our costs were rising. Our supply chain costly and complex. We had high costs across our stores, high wastage, poor availability. And now in terms of our people, change fatigue. Where we are now is an improved position, but as I keep saying, much more to do. In our customer experience, we have our new store format and an improving shopping experience across our store estate. We now have some bigger stores carrying our full range. We have our joint venture with Ocado as well as our range of floral gifting and wine on M&S.com. And as you've heard from Sharry and George, we're growing that family shopper and growing our basket. On product, our competitors still try and copy us and are very quick in doing so. So we're trying to lead the way on innovation and quality. We're focused on center of the plate on the products our customers buy most. We know we have a curated range and that gives us a competitive advantage. We're now seeing improvements in our value perception, but we're still leading on our quality perception. On value, we know we've scaled back promotions, and that's worked. We want to be trusted everyday prices. In operations, we're still seeing cost inflation, but we have a plan to mitigate those costs. We've improved our supply chain slightly, much more to do over the coming years. We have a focus on availability and that balance on waste. And in terms of our people, I think we've got a great culture across the whole organization and empowered team, specialist skills where it's required most in categories like bakery and fresh meat and protein. But also, we're trying to invest in our systems to drive a high-performing productive way of working and culture in our business. To end, I hope that was a useful update on where we've been, what we're doing and the progress we've made, but the opportunities ahead of us in these coming years. Over coffee break or lunch breaks, Sacha, George, Sharry, myself, but also some of the wider leadership team will be here. Sarah in HR; Helen, who's our Stores Director, who's been with us 18 months; and Alastair, our Central Operations Director, who's been with us over -- just over 6 months. So thank you for your time. You'll be delighted to hear, time for coffee. So if we could have everyone back here in around 15 minutes. Thank you.

Good morning, everybody. Hope everyone had a great coffee break. Nice to see you all. I'm Katie Bickerstaffe, I'm the joint COO working with Stuart. I have the pleasure of looking of the Clothing & Home business, our global international business, everything data, digital and dot-com-related and our bank and services business. And I'm joined today by a couple of the guys from the team. We've got Richard Price, who runs Clothing & Home, who's going to be talking in a minute; and we've got Paul Friston, who runs our global business, who's in a film from Dubai, which we had great fun doing this week, and we'll be also around at lunch time if you've got any questions. I was persuaded by our Chairman to join M&S just over a year ago in an executive role. And before that, I have a long history with M&S as a nonexecutive and a little bit of transformation and turnaround experience. I know a few of you from previous outings. I'm not going to talk about the bank and services business today. We will no doubt talk about that at a later point other than to say that what we do there is the glue that binds the whole business together. And earlier on, Steve referred to some of the data and insights that we get, particularly around where our customers are shopping with our competition, which are extremely useful as we build our data engine. So it's a really important glue for the business. On to today. So today, really, I'm going to focus quite a lot of time talking about the progress that we've made in Clothing & Home, but importantly, really focusing on where I think the opportunities are. And those opportunities are supported and underpinned by the work we've been doing across the data and digital estate and the growth opportunities that we have in global. When we stand here today, we have a most enormous opportunity across all of those areas of the business. We know where we're weak and that enables us to be strong and deliver an outstanding set of opportunities for the business, and I'm super excited to be able to share those with you today. We're all about creating a global omnichannel Clothing & Home business, powered and underpinned by data and digital For our customers, this is going to provide the most remarkable, personalized and relevant experiences. And during the day, you'll see some [ VETs ] from the team and the rest of the team, particularly Jeremy, Stephen Langford, who runs dot-com and the rest of Richard's team will be around at lunch time for any questions. I wanted to start by talking about the scale of our customer opportunity. We have over 20 million customers who shop with us every year in Clothing & Home. But across those Clothing & Home customers, as of this morning, we know 12.95 million of them extremely well. Our greatest opportunity in terms of growth isn't just attracting new customers to our business, but actually, those customers who shop with us currently. If we can encourage the customers who shop with us currently to spend more with us, spend in more categories, more often. We know this is a great area for growth. So for an example, in womenswear, 63% of our Clothing & Home customers shop our womenswear offer. But we only have 11% share of their wallet. So we know there is growth opportunity just in that one women's wear category alone. And many categories that we run currently, I'll give you some examples, Kidswear, Beauty and Home, we have an extremely small share of wallet and a very small share of the market. And for me, that speaks opportunity. Around half of our customers in Clothing & Home have only ever shopped one business area, half of our customers have only shop once, and the products are sat next to each other in-store and online. Massive, massive opportunity for us going forward. So our -- the things that we're focusing on really for the future are about being able to drive full awareness to our customers of all the categories that we have at the time that's right for them, not right for us, very, very important; to make sure that we drive recency, frequency and value across the spend; and to be bold in how we engage and do this. So very importantly, we need to be relevant to our customers every single day. And Richard, in a bit, is going to talk about who we think our target customer is. We call our customers that we're targeting, modern and mainstream. Everybody in this room is a great example of that. And we know an awful lot about these customers, and every day, we are building more data and insight. We know more about the things that are relevant to them in terms of their style and what they want to buy. We know how important availability is to them, particularly in the dot-com channel. And we also know that these customers want to be inspired by us and help to choose the products that they want. Some of our customers feel overwhelmed by the choice across the channels at the moment. They want it to be easy to shop, they want it to be easy to choose, and they want to pick the products at the time that it suits them. We've made a substantial investment in data and digital over the last 18 months, and knowing our customer in the way that we do, and having the level of permission that we have that's borne by over 100 years of our brand behaviors and credentials, is a massive critical advantage for us and strategically incredibly important. So I don't need to tell you all this. I think the last time we were all together was 2 years ago. Quite a lot of people haven't gone out much over the last 18 months, so it's great to see you all here. What we do know is the last year has changed a number of things. We think there has been 7 years of digital and data change in the last 18 months. And actually, that's given us an enormous opportunity as a business to really drive change to be bolder, to be braver, to be more committed, to back the big things. I said earlier on, our customers through this period of time have become even more demanding. They want us to curate range and provide inspiration to them. They want maximum convenience. They are very intolerant of a lack of convenience. They want to buy product whenever, wherever they want to. And our omnichannel strengths are very, very important and will be key to winning. They also say to us they want us to do the right thing around sustainability and investing in the products that matter Close relationships with our suppliers. We've also noticed, and you wouldn't think so standing in this room today, a massive shift in the way customers dress, 80% of the spend in the last 12 months was on casual dressing. And we suspect that casual dressing will be a thing of the future, not just a thing of the past. We've also seen a massive step change in online penetration, absolutely enormous numbers in terms of our online performance, but lots and lots of opportunity to get under. And the competition and the market has shifted. We've seen the collapse of some of our competitors, Debenhams as an example, but our other competition are getting much more focused and aggressive, and we have to up our game. We have to learn how to park our tanks on their lawns. And in the U.K. and globally, we've also seen the rise of platforms. Platform businesses are extremely successful, and we think that's a big opportunity for us to leverage. Over the last 18 months, by focusing on where we are weak, we know it will enable us to be strong. There are many things that we have to fix. Many of those are right in front of us and are actually extremely easy to tackle. Others are more complex and will take investment in time, but we're absolutely determined to make the changes that we need to. This exposure of our weaknesses has become extremely apparent during the pandemic. We've really reflected on the lessons that we've learned and where there are critical areas that we need to fix. A couple of examples to pull out to you. As you know, our customers, in general, are a little bit older and during the pandemic, much more likely to stay at home, let alone the fact that nonessential retail was shut for quite a long period of time. In terms of our traditional category mix. We were more likely to be harder hit during the pandemic, particularly with our focus on men's formal wear and lingerie. And we were also overexposed stores in terms of a trading environment and had under traded online. And our operational relationship with our suppliers and the time it takes to get products through the supply chain had exposed us. The longer lead times were not responsive enough and we couldn't move our stock around quickly enough to be able to fulfill the channel where the demand was. I'm actually really pleased those weaknesses were shown up because what it does is it gives us opportunity, and we started to tackle some of those things. So looking ahead and building on those things that we know about our business, I wanted to talk to you about the 4 key pillars that we're working on in terms of our strategy. The first is all about product. Stuart talked to it earlier on about the magic in Food. We are here to restore the magic in M&S product. We are absolutely resolute and committed to delivering relevant products to our customers with own label fundamentally at the, core. Reliable, repeatable, never boring, with consistent availability whenever and wherever you need to buy our products. We've started a process investing in our teams, investing in our systems, and using data and analytics at our heart to make sure that we buy the right product in the right quantity with the shortest possible lead times and turn our stock as much as we can. That investment is starting to pay off. And we've used data and analytics to drive a number of things. As an example, at the moment, we have a small sale in store. That's actually being run by a robot. we trialed it in Ireland. We then rolled it out of the U.K. in the summer. And for this end of season sale, the robotics and analytics are running the sale. The data and the robotics are very important, but the wrapper that you put around it is also incredibly insightful. How customers respond to different colorways, how customers respond to the way the sale is laid out in-store and online, when they shop and how they shop, all underpins the way that we do things. We've also started to work with our suppliers reducing the number of fabric mills that we use, building closer longer-term relationships with fewer suppliers. This is about taking noise out of our supply chain, reducing our lead times, but very, very importantly for us, getting to innovation quicker. We have a history of incredible innovation in Clothing & Home. Sometimes, we've lost our way a bit. And now we have an opportunity to get access to really fantastic fabrics, really fantastic cuts and get those before anybody else. We always take care in how we source product, and we have a big team making sure that technically, what we do is absolutely right. In terms of dot.com, we really have pushed our online credentials over the last 12, 18 months. We are pushing online extremely hard. But we're not just pushing online. We're pushing online access through the app, and the app is the key to M&S. We have over 2.9 million active app customers at the moment. Joining up those interactions with our customers are very, very important, whether in-store, whether through the bank, whether through the app or whether through dot.com, making the offers we put in front of customers, both personal and relevant and maximizing our digital interaction, we think, is critical. Last year, we launched our MS2, which is our big change program for dot.com, which I cosponsor with Richard. This inverts our business model, and I'm going to talk about that in a little while. We also have significant international ambitions. Apologies for the slightly jet lagged look today, but Paul and I have just been over with Steve in the UAE for a few days, and we're just back. In fact, I'm sporting some of our M&S modest wear range today, which is a big seller in those markets, and we actually think it's a big opportunity for us in the U.K. as well. So in terms of International. We have enormous opportunity online on our flagship websites. We have enormous opportunity with our partners across India, across the Middle East and across the Far East and one of our franchise partners we spent a few days with this week. And we also have opportunities across marketplaces with partners such as Zalando where we're trading very well. We have to invert our supply chain and make sure we understand getting the channel right, getting the stock allocation right and making sure that we serve our global customer base is very, very important. And of course, as Stuart said earlier on, within this giant ecosystem with this digital footprint, stores remain very, very important, not just to somewhere where you can look, feel and try on products where you can talk to customers and colleagues about what you like and what you don't like and interact in that way, but also to service our dot.com growth aspirations, whether that's through in-store fulfillment, whether that's through really quick contactless returns, we think having the product near the customer in this new world market is going to be incredibly important to us. We're also going to talk a little bit today about deepening customer relationships. We know our 12.95 million customers who are in our Sparks program incredibly well. We have enormous reach and scale. We also have huge levels of permission. And having that level of permission needs to be dealt with the respect and integrity. So we can use the data to drive relevance and talk to customers about product they like at the time they want to listen in a channel they want to be engaged with and only showing the product and the personalized products that matter to them. So as an example, many of you in this room today, if you clicked on to our app, and I'm assuming you're all app users. If not, we can help you sign up later on. That will help get my numbers over 3 million. You'll see that you have personalized experience in your app. What I see on my product display stage is going to be different to what Emma sees to what Aaron sees. Everybody's is different. We'll also send you e-mails that are relevant just to you. Sharry talked earlier on about the fantastic open rates we have in our Food e-mails. It's the same in Clothing & Home. Customers want to engage with us. Why does the app matter? Why do those e-mails matter? Because I don't have to pay a search company for that traffic, so the cost of acquisition of a customer is much, much lower. They're in our ecosystem, they're part of our gang, and we can serve to those customers with things that are relevant to them. Also, we know kind of what you're going to do next. And I'm sorry because it does sound a bit brother, but we really do know when you're going to buy school uniform, when you're going to treat yourself to a bottle of gin. We know what clothes size you are. So if we don't have that clothing in stock, we can put something else in front of you or not serve that clothing up when you're trying to buy it and frustrate you, so when you do get to the basket, it's not available. These are really, really simple things that drive conversion across the business. Building our personalization capabilities is extremely important. And in a bit, you'll see a video featuring Jeremy Pee who's going to bamboozle you with science and data. Within that bamboozling, we have over 1,800 record points across every single customer that sits in Sparks. That gives us multiple opportunities to communicate with customers. We know where they live, we know how many children they have, we know what they're going to do next, and that gives us the most enormous opportunity. So on products. In a minute, I'm going to hand over to Richard to talk a little bit about this, but I think there are some key fundamentals that we've learned. First of all, we've committed to making the bigger lines bigger. I know that sounds very, very simple, but never being out of stock on a black legging, always having socks available at any time of year. We've cut our options down by a 1/4. And we've built strength in what we call our hero categories, particularly denim, knitwear and Schoolwear, where Richard and the team have performed incredibly strongly. We're very clear on target customer, what they like, what they don't like and what's going to resonate with them. And we've made some moves in particular, where we think it matters to customer as a result of the COVID pandemic. So as an example, about 18 months ago, we launched a brand called Goodmove, which is a fitness brand for men, women and children, and we have a Kidswear range in Goodmove as well. From nothing, the Goodmove business is now a GBP 70 million business in the last 18 months. And that more casual and flexible approach to dressing we have rolled out in our recent autumn/winter campaign, anything but ordinary. I'm not really allowed to tell you how it's doing rather than walking around smiling about the way that, that campaign has launched and how it's resonated with our customers. We've also done an awful lot to build our credentials around trusted value. We've eliminated friends and family, and we're starting now with personalized targeted promotions, using the science and the analytics and the permission to drive where we invest our marketing. Most importantly, our stockholding is down 1/3. So we're making that stock work much harder for us and reducing our lead times. There is so much more to do there, but it's a great start. So as a result of the investments in value, we've started to change customer perceptions. This chart, which is quite difficult to read, I think, from the back. So apologies, we are going to send the charts out later on, is the [indiscernible] customer perception data on value for money and quality. And I'm very pleased to say that our Clothing & Home business is ranked #1 in the market. Back in the #1 position on value and quality. This doesn't mean cheap, but this does mean we offer a lot of value to the price that you pay. We offer everyday value in our Clothing & Home business. It also means that we don't have to get into a promotional drug and the promotional cycle, and that happy balance of less stock into sale, less friends and family, more relevant products and everyday value, along with personalized offers, means that you're not in a cyclical race to the bottom in terms of margin. So in terms of our overall proposition, we've done a little bit of work over the last 12 months. That doesn't mean there's not lots left to do. First of all, as you know, we relaunched Sparks about 12 months ago. When we relaunched it, we had 6.3 million members. As of this morning, we're at 12.95 million members. What that says to me is when we put our minds to something and we get behind it, we have incredible scale and reach. Am I happy with it? No, I'm not. Some of the customer experience on the app is too clunky. We haven't launched Sparks Pay yet. That's coming next year, which will tie everything in together. And we have more work to do to improve our NPS to make you feel super special when you're in the gang, but it's a start, and it's a start at scale, which is fantastic. We've also added some brands to our mix in terms of making sure that we can really push our business further. We've cemented our hero categories with investment in the lingerie range, for instance, why would you shop anywhere else when you can have entry price point product right through to boutique and [indiscernible], beautiful products, beautifully made, offering a great, great selection for our customers. But we've also complemented our own label range with other brands, and I'll give you a couple of examples. As you know, we bought the Jaeger business a few months ago. And the new age Jaeger has just launched this week, absolutely beautiful product actually modeled by a number of my ex-colleagues. That is a different customer. It's still the M&S customer, but we're encouraging those customers to trade up a little bit. And another example would be our partnership with Clark shoes, which was particularly useful during the back-to-school time where you could buy all the essentials that you needed for school and buy your school shoes at the same time from the same place. That would have been spend that they spent with Clarks or a different retailer 12 months ago, super easy to do the whole spend with M&S. Perfect. We now have 33 brands live. The average basket spend in dot.com on those brands is double the spend that other customers spend, and we know a significant number of those customers are new to M&S. We're in a very, very rich hunting ground here, but we've only just started. We'll probably change some of those brands over time. We have work to do to make sure that we fulfill those orders more effectively. We have work to do to push those partnerships harder. We have work to do to improve the online experience. New customers to the market, new categories, new ranges, starts to build our marketplace credentials. Super excited about that. And because we're global, we're also going to be launching some of those brands globally, starting with Jaeger in 3 stores and online in the U.A.E, which we think is going to be a very strong market for Jaeger. We've also worked to start to improve our supply chain and build our supply chain foundations and make them stronger with our single-tier network. And over the last 12 months, we've managed to double the volume out of Donington. In order to help us as well, we have the most fantastic exhaust pipe in the organization, which is our in-store fulfillment processes, which Sacha and the team helped us with enormously last year, and we're going back for more this year. The investment in systems and processes in terms of store pick, very, very important. And again, we have huge progress to make there. Really thinking about where we invest in our supply chain to have the product in the right place, turning as quickly as possible is absolutely fundamental, and that needs to be underpinned by brilliant systems development. So lots of opportunity, lots we have got to get done. When I first started working back in the day when dinosaurs roamed the earth, somebody very wise I worked for said something today which stuck with me, and still sits with me today. I thought I was pretty cool. I was on the Unilever graduate scheme. There I was in New York living the dream. And he took me to one side, and actually, I can almost hear Archie saying this. So I'll probably want to rephrase this and he turned to me and he said, "Katie, focus on how you can get better, not how much better you are." And that is the way we run this ship. We have strong foundations in the business. We've learned some lessons from COVID, where, frankly, we just weren't good enough, and we have huge opportunities ahead of us. As I said earlier, by admitting where we're weak, it enables us to be strong. It lets us go harder, it lets us go faster, and it lets us be braver. Take a risk, have a go, try something different. So this morning, you're going to hear quite a lot more about product from somebody who knows it absolutely brilliantly. About our contemporary focus and about the opportunities that we have to grow other categories. You're going to hear a lot about MS2 using customer data to be more relevant, to drive our omnichannel experience, to expand globally, and to partner with other marketplaces to extend our reach. Building the capability to unlock value and drive change through this organization starts in one critical place, and that's with product. And I'm delighted Richard's here to tell you a bit more about it. Richard?

Thank you, Katie, and good morning, everyone. Delighted to be here. I think I met a number of you virtually 6 or 7 months ago, but particularly delighted that we're all in the room, and we can talk to you about the great stuff that's going on in Clothing & Home up close and personally. So that's really, really exciting. So I came back to the business 15 months ago now, and I've always worked in the Clothing & Home business. And I think what gives me a real opportunity to lead the Clothing & Home business is that I had 7 great years here before and learned a huge amount about this business, but I've also spent 25 years in and amongst lots of other Clothing & Home businesses on the high street, including Next and lately at Tesco, and I learned a huge amount outside of this business. And I rejoined this business for 2 reasons. Firstly, I absolutely love M&S. I think this is an amazing business. But more importantly, because I kind of recognize from outside the business and really believe in the opportunity that we've got in Clothing & Home to win and really behave like a market leader. If we use our scale and our technical ability and our capability to make the big bigger, deliver great product at trusted values, it really does work, and we've got numerous examples of that. But -- and as all of you know in this room, we've just not done it consistently enough over the years. And all too often, our customers tell us, "If only you would, or "I love M&S, but", and there's all too often a but. And I want to spend the next sort of 10 or 15 minutes talking to you about what we're doing about that within Clothing & Home to build a brilliant product engine. And what do we mean by product engine? The product engine is essentially the operation and the teams that design, source, buy, move and sell the Clothing & Home product. And I want to talk to you about 3 things. And a couple of things. I'm almost deliberately repeating what Katie said because they're really important messages to get across. Just a little bit around the market and how the market has evolved and what that means for us. What we are going to do to win? I think more importantly, and I think I know you all want to hear how we're going to do this sustainably and keep winning. So I mean much of what has happened in the market is not new, and I'm sure you are fully aware of -- a lot of this was happening pre the pandemic. It's a competitive and increasingly fragmented market. Average spend has been flat for a while and wardrobes are increasingly full. And we know that customers, while they love newness, a lot of customers are investing in purchases or -- for replenishment. They're replacing worn-out or tired clothes. And there's also an emerging challenge around the disposability of fast fashion, and lots of challenges around what we -- how much fashion affects of the planet. And obviously, there's a huge amount of that we're including in the Plan A relaunch, which Steve referenced earlier. And obviously, we'll be covering in more detail later. There's been a huge, huge seismic shift to casual dressing, happening pre pandemic, but we've really seen this accelerate. And as you know and as Katie mentioned, it's not historically been a strength of ours and significantly more has been spent online. And we know that shopping is less frequent in this channel than it is in-stores. So what this meant for us over the last sort of year to 18 months is it really accelerated some of these behaviors. And it really, I suppose, exposed some of our weaknesses, but it's really made it clear to us as a Clothing & Home leadership team what we need to do to set this business straight. We know that formal wear has been a challenge. Customers have bought a lot of active wear a lot of leisure wear, a lot of pajamas, and amazingly, a lot of slippers. But it's also enables us to really rethink how we run this business. And COVID has highlighted areas of substantial opportunity for M&S to get after. We're a family business, and we know that families spend more than average, and this is often driven by growing kids. The growth in casual, whilst has presented a challenge, I think this is our single-biggest opportunity. I'll come on to it in a second, but our casual product has just not been good enough. It's just not been relevant enough. And my teams have done a huge amount of work in this area over the last year to 18 months. And our casual ranges, I am super proud of, and we're really, really starting to get traction now, and our credibility in that area. And as Katie said, in an area like active wear, which is very, very much dominated by leading world-class brands who spend millions on marketing, we've been able to establish ourselves a really, really much loved and successful brand in a short period of time, in the most difficult area of clothing business. We're also market leaders in denim, another very brand-dominant area. And if we can do it in these areas, we can do it anywhere. It is a very clear and significant opportunity to grow our home business. We know that customers, the whole population, have spent a lot of time locked in their homes. And it's really made people reappraise and reassess their lives and particularly the value of their homes. A lot of competitors have left the market, high-profile big competitors that is clearly offering up share for us as a business. We have an enormous customer base as Katie and Stuart I've just outlined. But as Katie said, half of our customers only shop in 1 business unit, and 20% of our store customers do not shop with us online. Massive, massive opportunity. So driving cross BU and cross-channel shopping is our biggest, biggest opportunity to drive sales growth in Clothing & Home. And here are just a few examples that really, really highlight that. We have 4 million lingerie shoppers that do not shop an item of womenswear. If we were to get these customers to spend in line with our normal womenswear average, just that, that's worth GBP 400 million of incremental sales. 6 million of our shoppers, they buy kidswear but not from us. So these are parents, these are grandparents, they're buying for kids, but not from us. If we can get our fair share of wallet from these customers, it's another GBP 70 million. We have 22 million customers across Clothing & Home and Food that do not shop our home product. Staggering. 10% of their spend gives us another GBP 150 million. One of my favorite stats, and I think this -- it's a small stat, and my team are a little bit tired of hearing it, but I think it really emphasizes the opportunity we have in the business. We've just regained market leadership of Schoolwear, 24% of the Schoolwear market. If that doesn't demonstrate what we can do when we get our back and shoulders behind, and -- our projects and do things with confidence, then I don't know what does. In kids' bedding, we've got 0.5% market share, quite a big difference between 24.5%. Now I'll say to my team is that if our customers are proud to send their kids, their most precious possessions, out to school for 6, 7, 8 hours a day in M&S school uniform, which we know they are. Why the h*** would they not took tuck kids into bed in M&S bedding? It just doesn't make sense. And I'm constantly pushing the teams to be brave, be courageous and really get after these market opportunities because I think -- I personally think we've got a real right to play in some of these categories. And just talking through Home. The team have done a brilliant piece of work to really, really use the data that Katie referenced earlier and really understand our customers and where they are in their life cycle. And we've identified 4 key life stages, which, again, very obvious when you list them at really helping us in focusing our Home ranges, and that's: Leaving home, first home, forever home and downsize. Four key periods in people's lives when they are really looking to invest in the Home market, and that's really helping us make some significant inroads in our Home business. So we talked a lot about customer, and I think mass businesses will always say, "Oh, you need to know your customer. You really need to focus on your customer." I really believe that we've not had a single-minded view of our customer for a number of years, and it's something that, with the insight team and my leadership team, and with the use of data, we've really, really focused hard to make sure, firstly, that we really understand our customer. We really know what they want from M&S as a brand. And more importantly, every single element of the Clothing & Home teams are focused single-mindedly on the same customer. I think in the past, we've been in different places across different business units. So we're focusing on the modern mainstream. These customers generally are in an established point in their life. They're family focused. We know that they're active, social, and we know our customers love a holiday. They like to think of themselves as hard-working and responsible. And as I said, they really do value their social life, and it really does affect the way they look at Clothing & Home. They like to dress smartly, but not overly formally. And they really do take care in the way that they choose their outfits. We know this. And I think in the past, we've not really helped them enough with this task. Home, as I say, is at the center of their lives. They're not fashion forward. They are the mainstream, the modern mainstream. And as I said, we've got a single-focused view of that customer now. And we have so much data and so much knowledge, and we're really able to start to talk and communicate with customers in a lot more of a personalized way. We're no longer classifying customers by age. We're talking about customers now with reference to their attitude to style. So what do customers tell us about our Clothing and Home product? Now there is a lot of good news. There's a huge amount to build on. As Katie said, we have the highest purchase consideration in the market. We are significantly the highest rated for quality amongst our peers. Our value-for-money perceptions have improved significantly over the last 4 to 5 years. And we're really, really known and cherished for many elements of our service proposition and bra fit probably is the most notable. Our customers love that service and it's extraordinarily valuable to us commercially and as a brand. As I said earlier, there is a but. We do lack inspiration, and we have been too formal in the past. Our lack of style has been the single biggest reason why customers walk out of our stores empty-handed or do not visit us on a regular basis. The second biggest reason is availability. We've just not delivered consistent availability. And one of the key initiatives that I will come on to is absolutely making sure when we offer customers amazing product, and particularly when we communicate this in our advertising and with our social, that we back it and we have availability. All too often, we've dangled the carrot and when customers have come in to shop with us, they've been disappointed that they've not been able to find the availability or find their size. Huge opportunity, and hugely frustrating, particularly when we're spending valuable money on communicating this to customers and they can't get what they want. So we've made a lot of progress in a number of areas. We've significantly improved the shape of buy, really, really going after our best sellers. And one of the things I talked to the team about the most is confidence. Behave like a market leader. We have so many examples where we do things with confidence and authority where we are successful. We're moving to sales-weighted availability. Not rocket science, but in the past, we've had a binary approach to availability. We've not looked at our best sellers in a different way as we look at our outliers. We value -- we have valued the availability of a best-selling size 14 in the same way that we have a size 24. We're moving away from that. We're moving to an automated weighted availability that tells us really, really what the picture is. More contemporary styling. Again, not rocket science, but really making sure we listen to our customers. We understand the level of fashionability that she or he requires and that we deliver that consistently, moving more into slim fit, which is really starting to work now, and just giving more choice in these areas. Really focusing on our hero categories. We've mentioned school wear, lingerie really -- we're really powerful in denim, knitwear. And also, we started to grow, as we said, to areas like Goodmove. Many of these categories are really key entry points to our brand. And as I said earlier, we've really reimagined and we've relaunched our casual wear, our active wear and our kids every day. Our Kidswear used to be known for product that grandmas and grandpas would buy for their grandkids for special occasion. We're now making our product much more on trend, much more trend-aware, product that the kids want to wear. And we're seeing great success in this area. And the result of all of this, and again, Katie touched on it earlier and I think this is something that is so, so important, we're moving to a full price business, and we've massively reduced our stock into sale. Outside of our targeted Sparks promotions, we haven't done a single promotion in Clothing & Home in this calendar year, which is a monumental move on for us as a business. And we've not heard any noise from customers. In fact, I think they really, really are responding to a first price, right price, everyday value proposition. But as we said, we have to do this consistently. So how are we going to win consistently? So I want to talk about 4 key areas. Firstly, design and selection. It is all about product. We have got some fantastic people in our teams and in our sourcing offices and across the business. We put all of our 1,300 buyers, merchandising designers through our Never The Same academy over the last year, really with an emphasis on consistency, making sure that we have one best way and everybody in the business is following best-in-class operations in terms of the way we buy, sell and move product. We've really started the motor on test and repeat. So it's one thing making the big bigger, but if you've got clarity and you've got confidence and the big are proven, you've tested that product, the hit rate is significantly improved and it gives us a much more authority to drive that strategy. We've introduced new systems: option planner, Pareto. And as Katie said, our markdowns are now being managed by bots rather than hundreds of people and we're seeing significant improvements in our cash recovery, our sell-through and our margin on our sale. So not only our sales significantly smaller, they're also costing us less, which is amazing. Flexible sourcing, as I said, we've got great sourcing offices. We're doing a huge amount of work on reducing lead times. In Womenswear, we've taken our lead times down by 9 weeks, which is enabling us to buy much closer to the season with much more data, much more insight, and again, significantly improving our style credentials, our hit rate and our sell-through. The third area is optimized planning. We're investing a lot of time, effort and systems and data into making sure that we improve in this area. We've introduced a new commercial team into M&S.com. We're doing channel-specific forecasting. And this is going to massively improve availability, particularly online, which is a huge, huge opportunity to improve customer perceptions and drive sales. And we've also identified 500 lines, again, which Katie mentioned, lines that we are going to be never out of stock. These are some of our basic, essential, world-class products that we know that customers come back time and time again. And we just cannot afford to disappoint customers when they come to us for these products. The final and really important area is how we showcase our product. You've heard from Sacha about renewal and rotation, making sure that we have got the best stores on the best locations. But we're also doing a lot to inspire customers in our existing channels. We've recently launched what we call internally The Edit, where we're now laying our women's, I'll call it, formalwear, but it's more smart casual now as we're casualizing our business. But we're laying it out now in a coordinated way that really encourages and enables our customers to buy into outfits and improve our style credentials. We're doing this both in-store and online. And it really, really does make a difference to the way our stores are looking. And thankfully, gone are the seas of black trousers that we know take a lot of money, but our customers, basically -- they constantly tell us it doesn't do anything for us style credentials. So a huge amount of effort has gone into showcasing outfits rather than item-led displays. And we've had a really, really strong customer response. And you can see from the photograph there, that's the front of our Edit that's out there at the moment. And both online and in stores, we're getting a great response and it's making a significant difference to items for basket online. The objective of this obviously is commercial, but also to drive a reappraisal of M&S as a stylish brand, which is, for me, the single most important objective that we have at the moment. And I'm just going to play a little clip from -- a very short clip from our latest Autumn/Winter campaign, Anything but ordinary, which hopefully will demonstrate not only how we are putting out this together, but a little bit of around the confidence that is starting to come from the Clothing & Home teams. [Presentation]

Customers have responded really well to that. And actually, they love Anything but ordinary strapline. So just to finish, we're acutely aware and I, particularly, am acutely aware, I mean, coming back to this business, that Clothing & Home has made promises in the past and there's been false dawns. And there's a number of sort of key elements on this slide that we know we need to achieve to deliver a world-class product engine. We've got to be better at planning. We've got to be more strategic. We've got to improve our availability. We're increasing the amount of open to buy. We're introducing speed lane manufacturing closer to home. We know that we have to buy more of our products quicker and more of it on open to buy to really, really capitalize on the key categories for growth. The speed lane will support this to really make sure that we're maxing out on popular lines. One of the things that we're doing is we're bringing fabric much closer to the needlepoint. So we're reducing lead times out in the markets and really, really consolidating the number of mills and the number of factories. So we've got really long-standing powerful relationships with some of the best factories in the world. Never out of stock on brilliant basics. And most importantly, we're a full price business, and we get our sell-through up into the 90s. I personally believe that if we deliver on all of these consistently, then we'll have a Clothing & Home business that will return to sustainable profitable revenue growth. I'm really confident of that. So with that, I'm going to hand back to Katie.

Thank you, Richard. Thank you. I recognize I'm between you and lunch now, so I'm going to crack on and you'll be relieved to hear there's a couple of films to break me up a bit. So you've had a bit of an overview of the product offer, not only what we've delivered, but more importantly, what we think we can deliver going forward, which will deliver growth to the business. And we're seeing some really interesting metrics in terms of new product that we've launched and customer response to that. I actually just want to take a little bit of your time to talk about something that's incredibly close to my heart, which is about our step change in our global omnichannel experience by accelerating what we do online and making sure that we join that to our store estate with less space but more effective store operations to create a superb, unique and special and ultra convenient experience for our customers wherever they shop globally. So I'm going to talk a little bit about the framework of MS2. And then during the course of this, there are going to be 3 films: one from Jeremy, one from Stephen who runs our dot-com operation and one from Paul, who's going to talk about the opportunities that we have globally. So what have we done with MS2? Well, first of all, very importantly, MS2 has put the customer journey in digital right in the middle of M&S. We've inverted the model, and we're behaving like a pure play within our MS2 team. It's very, very important we have MS2 and M&S.com right at the center of the organization. But we also recognize we have the advantage of having omnichannel options to fulfill and serve customers. Through our work in MS2, we're pushing very hard to recognize the opportunities that we have, of which we have 15 work streams to deliver where our competitors are strong and we are weak and how we have to improve, but also how we can grow our share profitably in this channel. MS2 has reconfigured the way that we operate. It's reconfigured processes, it's reconfigured systems, it's reconfigured decision-making and aligned operations in a different way of thinking. Everything we do in MS2 is digitally led, customer first, set with speed and pace, allows trial and error and test and learn, which we think is incredibly important in our business, all underpinned by data. So why do we think data is really important and what underpins some of the investment in the decisions that we're making in MS2? What we know categorically is the more digital touch points a customer has with Marks & Spencer, the more they spend. Customers who have 4 digital touch points and -- or 4 touch points with M&S, which is the stores, the app, dot-com and bank and services products, spend 10x more than a customer with only 1 touch point, an average of GBP 1,400 a year, just extraordinary. As I said at the start, the opportunity to ask our customers to engage with us in more channels and spend more with us is significant for our business in terms of growth. The key to anchoring this engagement is through our app. Our app customers are highly engaged with us. Their frequency is significant. A lot of our app customers make 70 to 80 visits to the app a year. And they convert very, very strongly. Leveraging our store estate to fulfill and fuel these MS2 ambitions is extremely important as well. And retail have a role to play to drive value, to drive the proposition and to up-sell the products that we have to our customers and they're doing a superb job helping us with that. We know that in Clothing & Home, dual-channel customers, so that's customers who shop in store and either in the app or dot-com, spend twice as much as those customers who only engage in 1 channel. So retail has a critical role to help us grow that basket and that spend. Half of our single customers -- or single-channel customers only shop in 1 business unit. So they'll only shop Womenswear or they'll only shop Kidswear. You can see where I'm heading with this. Just massive, massive opportunity. So if we manage to get more of our customers to touch more of our 4 interfaces with them and engage with our loyalty program, we know they'll shop more BUs, they'll shop more frequently, they'll spend more. What's not to like? So what does the MS2 program do? Basically, the team focused on 3 big and significant areas. First of all, best offer. Having the right offer for our online customers, to be credible versus our competitors with regular drops of newness, online-only specials and significant and great availability. If I was doing Richard's appraisal, which luckily for him is next week, but I thought I'd share a bit of it with you, I think we're starting to move stuff very strongly in terms of our product offer, but there is an awfully long way to go. We have much more work to do to think about what the online specials are that we offer, whether that's through sale and outlet credentials, whether it's through the product that we put in front of customers. We have much more work to do around personalization, more newness drops, particularly for the online customer who has high frequency with us. And the #1 thing that will step change the performance of MS2 is better availability, which Richard talked about earlier on. Significant opportunity for us and lots of work to do there. In terms of brilliant selling, not only do we have an opportunity to drive our selling credentials within our store estate, but we also have significant opportunity to improve our selling credentials in dot-com with amazing and seamless that are underpinned and powered by personalized data, which lead with the app. And as I said earlier on, the more people who use the app, the more we can drive personalization, the less I have to spend on marketing investment in terms of Google and search spend. So the app is critical and a key gateway to our business. And you know I like big numbers. We want to double the number of app users we have over the next 12 months. So the team are working very hard to get us there. And finally, within dot-com, no dot-com business is successful without outstanding service 100% of the time. Whether it's rapid delivery and fulfillment, whether it's click and collect, pain-free returns, all of these things are opportunity for us. We have a very, very quick contact -- return process now in store, but it still takes us too long to move our returns through the network and get those products back on sale. And we're trialing all sorts of really interesting things to get product back on to the shop floor really quickly or back available in a pick slot for dot-com customers immediately. We've done a lot of work on in-store fulfillment with reserve and collect, and that is now extremely fast in my local store. I think the pickup time is about 36 seconds, which is remarkable. I'm looking at Sacha who's nodding sagely. But taking away the friction and recognize that those customers aren't coming into store to browse a load of clutter that's in front of the click and collect area, they're coming in to pick up their purchase and get out is fundamental to the offer. And the retail team has done a superb job really speeding that up. To using in-store fulfillment to dispatch orders near or where our customers live, to utilize some of that additional store space we have to use it as a locational warehouse for our customers. So lots and lots of opportunity for us within famous service. So historically, what we've done is build our forecasting on store demand. The range breadth has been allocated by store space rather than how quickly things sell and where they're relevant. We have many stores that are over spaced and so we've been filling those stores with stock that doesn't resonate with customers. And frankly, a balloon goes up when we make a sale. Where we're going is having demand and forecasting based on what we believe our customers really want, backing the big stuff and making sure that the product and the way that we dispatch it through our network is ready for dot-com first. Less hangers, more bulk packs, more multipacks, more things that are folded flat that are easier to put through your letter box. Historically, we've delivered promotions based on store stock availability. That is changing very rapidly. Our promotions now are tailored through our Sparks membership. If you're loyal and you're in Sparks a lot, you get a better deal, see the stock earlier and we kind of know what you're going to buy. Our best offer work stream really helps us focus on where we plan, where we buy and where we trade and shift that towards online. It doesn't mean that customers in store don't benefit and our stores don't benefit, but that rigorous scientific planning will deliver better availability in both channels. Within the best offer work stream, we have 4 really key focus offer areas that we're working on. The first is that relevant authoritative offer. The second, as I said earlier on, which is huge for us, is improving availability. The third is compelling gifting. We've kind of stumbled across the gifting business. We had significant gifting sales, particularly in the food business and in hampers last year. People couldn't get out, they couldn't see their families. We have a significant gift card business. But gifting has been very, very successful for us, and I'm really pleased that we have a joined-up gifting proposition between Food and Clothing & Home this year. Not only can you buy your Percy Pigs to eat, but you can buy very, very lovely Percy Pig huggable warm fleece. On sale now, folks. So quick, get them while you can. And also broadening our reach for those customers that are within our ecosystem through having the brand offer that we have with our 33 brand partners. So we're going to walk through each of those in turn. Richard talked a little bit about the best offer for MS2. That really is about having an authoritative range in front of the customer. We've invested in the commercial team for dot-com. We've invested in the shape of the buy. So we've expanded in some key areas. And this year, that was all about dresses and casual tops, more use of multipacks and bundles. We've moved from 10% to 15% of online sales already in terms of those multipack and bundles, which would be things like 2 or 3 casual shirts together, bundles of lingerie, bundles of men's underwear, bundles of pajamas and bundles of school shirts. As Richard said, one of the great things about the dot-com channel and reducing our lead times on products means we can test and learn. We can see what customers like, and that gives us confidence early to back an even bigger buy on some of those products. And we can be more responsive to trading with a different rhythm of newness. We can learn very, very quickly. And interestingly, some of our range is relevant all year round. So frequently, we'll move swimwear to the back because we need to put winter coats to the front. But in dot-com, there are lots and lots of customers searching for swimwear in the middle of winter because they're wondering about a nice sunshine mini break. I said earlier on and Richard has also said this, availability is critical. The shape of the buy, it starts with the shape of the buy, then having the systems and processes that are there to enable us to make sure that we support all the channels that we have open to us. And we need to double down on our never-out-of-stock program in some areas with online stock always being a priority. And the reason for that is it's very difficult to switch sell a customer in online. When a customer is in store and they've made the effort to come to a store to buy a jumper, if it's not available in black, they may buy it in another color. It's quite hard to do online. We've talked about compelling gifting, and I haven't worn it today, but we do believe this Christmas there is a massive opportunity in personalization. Richard and I have team sweatshirts with our initials on. What do we like about personalization? It's about you and it's about your product. It's fantastic for gifting. It's a really, really lovely thoughtful present. And even better, you can't return it because it's personalized. So we keep the product sold, which is marvelous. And in online, we think we have enormous brand opportunities as well. The brands that we've introduced are complementary, they drive relevance and we also have opportunity with collaborations going forward, such as Ghost for M&S, which has been incredibly successful for us. We're also investing in drop ship capability, and we think the ability to do that and enable us to extend our ranges further without complicating our supply chain too much will be fundamental to us. So we launched Jaeger. And in fact, while we were sitting in here, I was a victim of our personalization engine. I received an e-mail to tell me that Jaeger had dropped. Jaeger men's, Jaeger womenswear is all online and is looking beautiful. So we have relaunched Jaeger. This is our first season with product that we have chosen. It does elevate our overall offer for Clothing & Home with a significantly higher ARP. It's about effortless elegance. It's about styling. It's about being inclusive. It's about tangible quality. You look and you feel the product and it's just sensational. This business has been built digital-first. We start with making the product look brilliant online with different imagery, a different customer journey, a different way of portraying the product. There are going to be some omnichannel trials. We are putting Jaeger into a number of our extremely strong stores, but we also have some digital trials within store that we're doing for Jaeger as well. The really interesting thing about it is it's using our scale and leveraging our channels and our infrastructure, but appealing to a different customer base, and we see that in the early Jaeger data hot off the press at the end of last week. So you'll be relieved I'm going to hand over to Jeremy in a second to show you a short film that he filmed a couple of weeks ago about the brilliant selling pillar in our MS2 program. This is about building amazing customer experiences driven by data, not opinion, not a whim, data and fact, making those experiences as seamless and easy as possible and being convenient for customers to choose and shop whenever they want to. Those things are very easy to say, but in a business with the legacy estate and legacy systems they are quite difficult to deliver. And so Jeremy is now going to share with you some of the scale of the opportunity.

I'm going to talk about how brilliant selling drives both acquisition and retention into the ecosystem that you've heard us talk about. Brilliant selling is about leveraging our digital and data capabilities to create relevant experiences, which can be executed seamlessly at scale. We approach brilliant selling in 3 distinct, but interconnected areas. First is mobile-led omnichannel. Second is about making it easier for our customers to shop. And third, personalizing every experience. Let's start with mobile. Here, we focus on putting mobile devices at the heart of the shopping experience for our customers and colleagues. Over half of our revenue now comes from mobile devices. It's the fastest-growing channel, having grown our active user base by over 150% in the last 2 years. The app is also key to maximize the advantage of having stores through omnichannel selling. Today, we have a group of digital and physical experiences that individually work well. For example, our colleagues can assist customers to purchase online through a handheld device and can even complete the order right there on the shop floor with Pay With Me. Customers can skip the queue with our Scan & Shop service or choose to get more advice through services like digital [indiscernible]. Improving these where appropriate with one-to-one clienteling tools or live commerce like video-powered selling starts to make brilliant selling the everyday norm. We're also making the app and Sparks core to the whole shopping experience, whether that be to buy, collect or seek inflow like scanning for content, sizing or color or even paying with Sparks Pay, which we'll be launching later next year. Then there's just making it easy to shop. Here, we're focused on creating brilliant experiences that help the customer complete their chosen mission with ease and eliminate the friction. We have introduced a fit tool that helps customers make better buying decisions and reduce returns, launch 1-click checkout to save time, scale personalization recommendations to help customers find what they're looking for faster. And by adding [indiscernible] building experiences, we increase relevancy and drive more revenue per order. Experiences such as these have improved online conversion rates by about 10% each year, while also getting customers to visit more often and across more pages. We have also focused on improving on the fundamentals. We have improved site speed by 10% each year and doubled our SEO visibility, further improving the experience for more customers. And then we have personalization. The goal here is to create a competitive advantage through data for 32 million customers across the business to make every experience better by being more relevant and growing our customer lifetime value. We think of it as a loyalty flywheel, where we can give customers better experiences through smart use of data. At M&S, we have over 5 billion digital interactions with our customers across the website, digital marketing and within our stores. Our ambition is to make every one of these 5 billion digital interactions feel special and unique to each customer. These interactions capture broad data sources across our estate, from our 13 million Sparks members as well as the data generated from each of our businesses across Food, Clothing & Home, International and M&S.com. Also, data from M&S Bank enable us to understand how customers behave and spend outside of our ecosystem. To realize this opportunity, we start with the foundation of our digital relationships, which is the Sparks loyalty program, which we launched last year. Since the relaunch last summer, membership has grown by 5 million to nearly 13 million members today. We also improved NPS by over 15 points by rewarding our customers through thank yous and giveaways, personalized offers and unique experiences like Sparks Live Events. And we have many more exciting features planned in the coming year. As a result, shopping with M&S through Sparks is a better experience. And our goal is to make it brilliant, remarkable even. As you heard earlier from Katie, there is an incredible multiplier we see when customers engage deeper with us across Sparks, the app, online and bank with their annual spend increased by nearly 10x by expanding from 1 to 4 digital relationships. By bringing all of these interactions across all our relationships and touch points together, we're able to create a single view for 13 million unique customers. We have built up close to 2,000 attributes against each profile, allowing us to make customer decisions and understand customer behaviors in real-time. And this powerful data engine allows us to realize our personalization ambitions where we've got off to a great start over the past 15 months. We built numerous data science customer models and over 100 personalization use cases, including personalized offers, predictive customer lifetime value, e-mail campaign targeting, [indiscernible] recommendations and personalized language, just to name a few. All of these making predictions at an individual customer level, which we believe to be the best at creating a great experience versus standard segmentation-based approaches. This year alone, we expect to deliver 500 million personalized customer interactions across offers, marketing and digital experiences that will deliver over GBP 100 million in incremental value. This is personalization at scale, making the experience better for our customers while driving growth for the business. This is just the beginning. In the next 12 to 18 months, we will focus on connecting these experiences across customer journeys and accelerating our flywheel. We will continue to grow our digital ecosystem across Sparks, app, online and the bank. We will create differentiated omnichannel journeys and power all of our digital experiences with the customer data engine to deliver personalization at scale. The foundations are in place, and the momentum is growing. We're looking forward to the year ahead and creating a significant competitive advantage.

We have a nickname for Jeremy in the business. He's known as the professor for a reason. He is a real expert in data and data science and digital, and we have a huge amount of opportunity. So thank you, Jeremy. He's actually coming at lunchtime as well. So any questions that you want to ask him, please feel free. So it's really good to hear how data and technology are coming together to enable us to know our customers better, to not have to sort of spread marketing spend around in an unfocused way, but also to use that data and that science to drive a really seamless experience for our customers at recency, frequency and value and improved conversion. That's all very well, but without those things and without service to deliver and support that proposition, we're nowhere. And famous for service is an incredibly important pillar within the MS2 business stream. We have too many customers who are frustrated when their deliveries are late or they have to queue in store to collect or the delivery doesn't appear when they expect it to. And we are passionate about getting this right, but also passionate about trading the delivery options that we have. We need to get this right for our customers. We've let them down too often, both with our relationships with our couriers, the way that we get products through the Donington supply chain and, indeed, the way that we fulfill those orders to our customers. The way that product arrives is the last impression that they get at Marks & Spencer. So here's -- we're going to introduce now Stephen Langford, who's actually filmed this film in Donington. So apologies if sometimes he seems a bit shout-y. The machinery has been dulled out, but it was incredibly difficult to film, but you will get to see inside Donington as well. So's here Stephen.

Good morning. I'm Stephen Langford, Director of M&S.com. I rejoined the business last year because I wanted to play my part in driving our omnichannel transformation. I started my career at Tesco in the early 2000s, part of the team that set up Tesco Direct, before moving to Asda to help set up their online clothing arm, and most recently, leading the George business. I'm here today at our e-commerce distribution center in Castle Donington, Leicestershire, which has been at the heart of our online success over the past year. I'm going to talk to you about the improvements that we've made over the past few years, which have enabled the substantial growth that we have been able to achieve, and to share how we are leveraging the advantage of store fulfillment capability to improve our speed to market and drive growth. As many of you know, 3 years ago, we had a number of challenges to address on-site here. The operation was overly complex and subject to frequent bottlenecks. This made it incredibly hard to consistently deliver the levels of service our customers expect and our competitors offer. So since then, we have changed the flow of the operation, removing pain points within our box automation and increasing our throughput capabilities. We've invested heavily in our systems to improve visibility, order flow and reliability of automation as well as providing real-time MI to support improvements in site performance. We've increased our packing productivity through introducing auto-bagging machines. And we've invested in more capacity through the addition of a mezzanine, which has added over 70,000 singles per day to the operation. Additionally, we've also repurposed an existing DC at Thorncliffe to ensure dedicated fulfillment and capacity for our new offer of guest brands at M&S... And finally, we're expanding capacity at Bradford Distribution Centre, which will raise peak capacity by a further 14%. As a result of these changes, peak single capacity has more than doubled and this has left us well positioned to deal with all the demands of COVID, enabling us to operate without interruption when the pandemic was at its height. Driving increased scale has been instrumental to the profitable online Clothing & Home operation we have now with fixed costs such as technology and property declining substantially relative to our sales. We now believe our cost per single is competitive relative to our key peers. Even with substantial increases in our distribution capacities, the unprecedented level of demand and disruption seen throughout 2020 required additional fulfillment strategies. To mitigate the risk of stock being trapped in stores and the significant shift in the mix of home delivery versus store collection, we scaled up over 200 in-store fulfillment locations. At its peak, these operations were fulfilling over 20% of our online demand. Since then, we've continued to operate these in-store fulfillment operations as they enable us to serve online customer demand from our broadest possible stock pot. We've built on the learnings from last year and developed the intelligence of our systems to ensure that it is a cost-effective, long-term solution. We will see a number of new developments for this coming quarter. Orders available in the store of the customer's collection location are now being picked from that store. Not only is this a lower-cost solution, but it also enables orders to be available to pick up much quicker for our customers. It's early days, but we think that this can address at least 10% of collected orders, generating substantial annual savings through fulfilling orders via the most cost-effective routes. We've made the in-store picking process more efficient through Honeywell technology. And you've heard from Sacha, we're enabling contactless click and collect, easy returns and digital payment in-store to improve service and to lower costs. Using our stores as micro-fulfillment centers enables us to service more demand and at a lower cost. It also has a very positive impact on how we manage our return stock. Where previously returned online orders would flow back through the supply chain network, making their way back here, sometimes several days after receipt, we can now get the stock back on sale far quicker, greatly reducing the risk of markdown. The investment in capacity I have talked through will provide us with headroom for the next few years, but we are already considering the next steps to develop more efficient capacity for the longer term. Our future network will have omnichannel automated sites, enabling faster replenishment whilst putting core products closer to the customer. A higher mix of efficient in-store fulfillment is a key part of this solution. Thanks for listening this morning. As you can hear, we are leveraging M&S's omnichannel advantage to help deliver brilliant service, and we are doing it whilst ensuring a profitable business for our shareholders.

So hopefully, those 2 sessions, Jeremy and Stephen show the power of bringing data and the power of bringing the 2 channels together. We do think that our omnichannel credentials allow us to win in the market. So far, we focused quite a lot on the U.K. and I just wanted to take a couple of minutes to talk about the opportunity that we have globally. There's no one better to do that than Paul, who's actually in the room with us, but was with me earlier on this week in the UAE and we shot a quick film while we were in Dubai. It's not us on the beach, by the way, having fun. It's us in a store. So here's Paul.

Hi. I'm Paul Friston, Managing Director of the International business. This morning, I'm going to talk to you about our transformation to an online-first global business with an omnichannel approach to market access with a range of partners with both local and global capabilities. As our business continues to recover from the impact of the pandemic, I've been pleased with our progress with a strong recovery in Europe, the Middle East and India, partly offset by continued headwinds in Southeast Asia as vaccination rates remained low and cases high. As all stores are now open around the world, I'm pleased we are retaining customers online as they increasingly shop across multiple channels. Throughout the pandemic, we've been able to use technology to operate effectively and reduce cost, from digital buying [ fares ] to how we're communicating in our retail operations. Our online business doubled last year, and we have an ambition to double it again over the next 3 years by improving the online offer. Already, we've increased our presence to over 100 markets with our direct-to-customer websites and are investing in marketplace capabilities to increase brand awareness and target customer acquisition in markets without a store presence, starting with Zalando in Europe. In markets where we have both the store and online presence with higher brand recognition, we are modernizing the store estate into a digital-first shopping environment with interactive content linking off-line and online product journeys supported by colleagues who are trained to sell across the channels. We believe there is a substantial omnichannel growth opportunity in markets such as India, Indonesia, Saudi Arabia and Russia. As an example, with our JV partner, Reliance, in India, we aim to double our Clothing & Home business to become the largest international clothing and home retailer. We will do this through a 3-pronged approach: expanding and modernizing our store footprint, accelerating our direct-to-customer sales through improved omnichannel proposition and scaling marketplace presence. I'm here in Dubai Festival City with our partner Al-Futtaim in one of our modernized stores where we're offering customers a better seamless experience through our digital online order points and colleagues who are equipped with handheld devices to offer Pay With Me and showcase to customers the full online range. And as part of our drive to have more local relevancy, we have now launched across the region freshly sourced local produce, a chilled range of halal products and modest wear collection in clothing. Our store modernization program builds on the latest U.K. schemes and includes dynamic content in windows and key movement areas, QR codes to show customers the full online range and digital shelf edge ticketing in food halls. We have just completed 2 other projects in Singapore with the expansion of Wheelock Place and VivoCity, both benefiting from these latest formats. They're delivering the essence of the U.K. renewal using locally sourced equipment, generating higher returns for partners and better for the environment by not shipping from the U.K. In several markets, where we have both a store and online presence, we have introduced local picking and fulfillment. As stock is closer to our customers, we can offer faster delivery times to improve the proposition. Later in the year, we'll be using stock in check to fulfill orders to the EU, which will reduce lead times even further. Similar to the U.K. MS2 project, we'll be trialing a more personalized service across our stores in India during H2 called clienteling, which enables colleagues to use data to curate ranges for customers. In addition, we will launch our app in this quarter, which will enable us to create a single view of our customer and drive a fully omnichannel experience. In digital marketing, we are increasing automation and cross-channel audience management in CRM and paid marketing. Across social, we optimize product feeds shared with Facebook and Google, allowing us to segment products with more granularity and tailor them to audiences. For instance, India have landed an impactful campaign to communicate the launch of the first Fusion Collection, combining digital and social channels with a strong influencer and insider support and tactical mall branding. We will also roll out third-party brands in selected markets, which we started with Jaeger this autumn and will source and design more locally relevant products as part of the newly developed global product engine, for modest wear, to halal food in the Middle East through to our new Fusion range in India. To become a truly online-first global business, we need to make continued investments in supply chain efficiency. In April this year, we opened our U.K. hub, which enabled volume to be delivered directly from suppliers, therefore, bypassing the U.K. network, reducing lead times and improving stock presentation and order visibility. We also plan to open an EU hub in 2022 to enable a more efficient supply chain with optimized routes to market and increased availability. So thank you for listening. As you can see, we have substantial growth plans and our ambition is to leverage our omnichannel advantage to build an online-first global business. So back to you, Katie.

Thanks, Paul. So much opportunity for us to develop the brand further globally. So you'll be relieved to hear you're on the home straight now. And apart from handing over to Eoin, I can draw the session to a close. I just wanted to reflect on a couple of things that I said during the day. First of all, we're here to create a business that is truly global and omnichannel led digitally first and backed and underpinned by data with contemporary product at its heart, powered by data, insight and personalization, being more relevant to more customers every day. Product like in food is at the heart and center of what we do, focusing on the modern mainstream customers, encouraging the customers to shop more often and chasing down where we know we're weak and there are growth opportunities in casual, in homeware and in Kidswear. Investing in improving the product engine, people, systems, processes to be more responsive and more efficient. Believing that omnichannel matters being seamless and convenient for customers, but while doing that, delivering sustainable profit across both channels. Using MS2 to focus and drive and prioritize growth, making it personal, making it relevant with more and more digital touch points per customer. We believe that building those deep and sustainable relationships are critical and important, making our relationships with customers more meaningful and relevant and using data to create a more relevant future offer for our customer, whether its own label or through partnerships with third-party brands. So we have a spring in our step, but we gaze at what's before us, not what we've done. We recognize there are many opportunities that lie ahead because sometimes, frankly, we just haven't been good enough. The scale of the opportunity we have to make changes is significant and we do that for the first time in a while with quiet and measured confidence. Every day, we focus on how we can get better, not how much better we are. Between us, my team and I run the business with an iron fist in a velvet glove. The velvet glove is about a passion for product, quality and innovation, but there is a steeliness to it. The iron fist with KPIs, metrics, data, targeting what matters, driving through change, asking the right questions and delivering results. We have the most enormous opportunity to build a global data-led omnichannel business that is not just fit for today, but fit forever. Thank you so much for listening. I'm going to hand over to Eoin.

Thank you. Well done. Right. I actually am genuinely between you and lunch now. So I'm going to try and do this in a relatively rapid fashion. And I think what I'm going to try and attempt to do is bring it all together, bring the whole thing together what you've heard about -- heard this morning. I know it's a huge lot of information. But hopefully, we can kind of get this into a coherent plan that you can take away. We're not going to -- obviously, today, it's not about financial results. We've got our financial results coming up on November 10, our interims. There, we'll actually be obviously updating on what we believe is going to be strong demand, albeit in the headwinds of the supply chain disruption. And I know a lot of you guys have been interested to talk to me about that at the break. So look, I'm going to do 2 things. I'm going to try and bring it together. I'm going to remind you again around what our financial principles and disciplines are as we manage our growth over the next number of years. And then we're going to break lunch. So you'll be glad to hear -- I'm going to try and do this in one page, all right, on one slide. And I'm going to do it in 3 columns: how we're thinking about the right now, what we -- where we see the real commercial growth coming from right now; how we're thinking about enabling growth, both today and in the future; and how we're thinking about our future medium-term strategic options, step-out options for us. All of this actually is increasingly going to be governed by our Plan A program. I think it's more -- that's more longer term in nature. And that's not just about how we think about the day-to-day reduction of waste and emissions in our capital program. But it's also, I think, increasingly going to be about how we think about new products, new technology and new ways of working to drive reduction in carbon across our broader footprint. So you're going to hear more about that, but that's in the longer term. So back to the right now. Just to bring it back together, as you've heard today, we think -- we are very clear on our commercial priorities and very clear on our target customers in both our 2 core businesses. In Food, as you've heard, we're clear in terms of building on our bigger baskets that we've seen in the last 18 months and really strengthen and broaden our appeal to strengthen category management, continue driving innovation and delivering trusted value. In Clothing & Home, we are clear about our target modern mainstream customer. We're clear about bringing and opening our style to already strong value and quality credentials, and we're clear of the potential of converting existing customers to shop more with us in broader categories. I hope this -- that came across very clearly in the discussion this morning. You've also heard about our strong ambition in online. I think really -- what's really hopefully came across is in a truly omnichannel way as how we think about online to our MS2 program. And of course, you just heard on our ambitions in International in terms of online, but also targeting core markets with our key partners. So I think we're clear on our commercial priorities. The second column is really about a lot of where the investment is going to be to enable all of this growth. You've heard both George and Richard talk about investing in systems to help our product delivery. So we're quite clear on our road map and quite a bit of way down in Food. We've got a bit more work to do in Clothing & Home in that regard, but that's going to be a part of our investment in the medium term. The -- we're very clear in terms of investing in Sparks. I mean, Sparks is our ecosystem, right? So just so you're clear, Sparks is our ecosystem. It's a very strong base already. You've heard the number, it's 12.9 million customers with significant usage. And now we need to make it more relevant and attractive and really drive growth through the personalization that you heard about. And then we've got our plans for our store site. And I know a lot of you are still very interested in how we're thinking about our store estate. And hopefully, Sacha brought some of that to life today. We're actually clear there are 2 models when we think about our store estate. In Food, we're talking about increasing space, either through existing stores or actually adding new stores, and we're talking about driving efficient operations. In Clothing & Home, we're actually talking about reducing space to better quality space, and we're focused on omnichannel and delivering service and selling. So there are actually 2 quite different business models, but we're clear on our formats in terms of how we're going to invest in both businesses going forward to deliver that. And we're clear on our store rotation program, which is going to be a multiyear program and are going to be funded by asset management, as you've heard me speak about before. And we've got ambitious plans to continue to reduce cost of our retail operations through our retail effectiveness program. Stuart already touched on that, and we didn't -- haven't spent a lot of time on that. But we've obviously made good start in that regard and we've a lot more to do in optimizing our end-to-end processes and utilizing technology more efficiently. I mean, we, like most businesses of our type, have got quite a bit of work to do still in our supply chain. And I think it's going to need investment in the medium term to drive both capacity and indeed productivity into the medium term. So there's a lot to do. And there is the investment required to do this -- there is a significant amount of investment required to do this, but we can do that in a paced way reflecting our capacity to deliver and our capital allocation model. And then in terms of our step-out growth opportunities, I mean, I think they're probably largely focused on 2 areas on what we do with Ocado and what we do with our broader ecosystem. And we haven't spoken to Ocado that much as Stuart's touched on it. But obviously, we're doing -- we're very happy with how things have gone so far with our Ocado relationship. We think there's a lot more to do together. We're very focused on growing the Ocado footprint with our partners. We're very focused on working more closely together in terms of how we're targeting customers and just in general bringing the best of both brands together into that JV. And as I said, of our ecosystem, the start is very good. Our Sparks platform is actually very, very strong. The question now is how do we add to it, as Katie has talked about. You might have heard the reference to Sparks Pay. That's coming next year. That's a service we're going to be adding to our platform. We're obviously adding third-party brands to our platform and we'll be thinking about how we do that going forward, and potentially other direct-to-consumer models and services in terms of adding that to that platform and making it attractive and sticky. So on one page, hopefully, it's all there. I didn't put up the sub words because you wouldn't listen to what I was saying. You'd be trying to squint and trying to see what it actually says, but that will be in your pack and that's how we're thinking about our strategic priorities going forward. I don't have a huge amount to add on financial priorities because you'd be glad to hear it haven't changed, and they shouldn't change. We should continue to stay focused on cash. I think we're making good progress in that regard. We're unswerving in terms of how we think about investment and strong paybacks. And we're very focused on optimizing our working capital. Maybe at this point, there's a little bit more for you. But you've seen over the last reporting cycles we're increasing the transparency of our reporting, hopefully enabling you guys to make your decisions. And I think you've seen that as to how we're -- for example, how we're talking about our online business and our online profitability, but also about how we talk about our store estate. As it happens, by the way, that transparency helps us, right? It helps us think about our own capital allocation decisions and strategic priority decisions -- prioritization that we have to make. And then I think you feel and hopefully you feel in this room an unswerving resolution to get back to sustainable profitable growth, right? I hope you feel that. If there is one thing you're going feel from today, that's what you feel. I'm not going to give new medium-term targets. I gave those in May. I'll just remind you as to what they are. I mean we do see Food continue to deliver growth through those bigger baskets, through more relevance, through larger stores. And we do see it progressively improving profitability. In Clothing & Home, I mean, hopefully, you'll see we've got confidence about getting back to growth through the new buying approach and indeed, of course, our expanded online capability. And we're targeting our online business to be 40% of sales over 3 years, and overall, an operating margin ahead of our '19/'20 levels. And then in International, as you've heard, ambitious plans to continue to grow in target markets, offsetting the cost of Brexit in that segment. And of course, something that you know is sort of close to my heart, continuing to do that by maintaining a robust balance sheet. And as I've said many times before, that's a balance sheet consistent with investment-grade metrics. So we think that gives us the greatest degree of flexibility to invest in the future in Marks & Spencers and return indeed to paying dividend in the medium term. I won't go through what medium term means again. You've heard that -- heard me talk about that before. So that's it. Hopefully, that helps. I mean the one thing I would just say just before we kind of hand over -- and lunch is going to be upstairs, and we're going to break it out into 4 different groups and you can go and ask questions from some of the stuff you've heard today with the broader leadership team. So that's -- hopefully, you can just go for your life. Don't worry, they've been told not to give the complete deals away. But now go for your life in terms of asking questions. It's a slightly different format. So hopefully, you'd enjoy it. A couple of things just to say -- first of all, just to say thank you for coming and thank you for listening. Thank you to all the colleagues in terms of presenting. I would just -- a lot of people go -- a lot of work goes into this, but I would just put a quick piece of thank you to Fraser and Jack, who put a huge amount of work into this event. So just thank you for that, guys. And I think if we're just going to -- I'm starting to think about what my sign-off would be here in terms of what to actually take away. And I came up with 3 Cs. I mentioned one of those Cs -- I'd better get off the Cs quickly the -- to someone here about it being cohesive. But I think what Steve said earlier here is that one of the things -- the 2 things to take away would be that we have resilience. You can see the business has built up resilience to get -- to navigate through some choppy waters. And then the second thing is it's got a plan. And in that plan, it's the 3 Cs, which is coherent, clear and in control. And I think that's the bit that we're continually building to and hopefully you've got a sense for that today. So thank you. Enjoy your lunch, and good day.