AGM Statement

Marks & Spencer Group PLC
14 July 2004


Issued: Wednesday 14 July 2004

Marks and Spencer Group plc ('Marks & Spencer', the 'Group' or the 'Company')

                            Chairman's AGM Statement

At the Annual General Meeting today of Marks and Spencer Group plc, the
Chairman, Paul Myners, is due to give the following statement:

'Good morning ladies and gentlemen. On behalf of the Marks & Spencer Board and
its employees, I am pleased to welcome you to your Annual General Meeting - and
delighted to see so many of our owners here. Given the recent events at your
Company - events you have been following in the media - this will not be a
standard Annual General Meeting.

I want to focus on the changes that we have made in the past few weeks. I will
also update you on the bid interest in your Company. Whilst I will be as
forthcoming as I can, you will appreciate that we are limited in what we can say
on this issue, given the tight rules that surround companies during a potential
takeover.

After my introductory remarks, Stuart Rose, our new Chief Executive, will talk
to you about the exciting new plans for your business which he announced on
Monday - including details about the plan to return £2.3 billion to shareholders
via a tender offer.

There will be plenty of time for you, as shareholders, to ask questions. This is
your Company. All the members of the Board are ready to answer your questions.
I would now like to introduce the Board to you. I will invite each of my
colleagues to stand up as I introduce them. First, Stuart Rose, Chief Executive.
Then on his right, your left, Alison Reed, Chief Financial Officer; Charles
Wilson, Executive Director of Property, IT and Supply Chain; Brian Baldock,
senior Non-Executive Director; Maurice Helfgott, Executive Director of Menswear,
Childrenswear and Home and Jack Keenan, Non-Executive Director. On my left is
Graham Oakley, Group Secretary; Stella Rimington, Non-Executive Director and the
Chair of the Remuneration Committee; Laurel Powers-Freeling, Executive Director
of Marks & Spencer Money; Kevin Lomax, Non-Executive Director and the Chair of
the Audit Committee and Mark McKeon, Executive Director of Retail and
International.

We announced on Monday that Anthony Habgood and Steven Holliday will be joining
the Board of the Company as Non-Executive Directors tomorrow. Tony is Chairman
of Bunzl, a leading distribution and manufacturing company. Steve is an
Executive Director of National Grid Transco, the power company. Brian Baldock
and Stella Rimington will step down after the AGM. The Board would like to
express their most sincere appreciation to Brian and Stella for their wise
counsel during their time as Non-Executive Directors. The resolution relating to
Brian's re-election is withdrawn. For completeness, you should also know that
the Board has asked me to chair the Nominations Committee and Kevin Lomax will
become Senior Independent Director.

In the year under review, profits were up; our financial position is strong and
the Board has recommended a 9.5 per cent. increase in dividends. Turnover rose
1.7 per cent. on a comparable 52-week basis. Operating profit before exceptional
items was up by 6.5 per cent. and adjusted earnings per share were 0.4 per cent.
higher.

Nonetheless, the business has not performed as well as it should have. Our sales
growth faltered during the second half and we lost market share in several core
segments. Our product proposition in a number of important areas failed to meet
the high standards expected by our customers.

But this is a great company with a fantastic brand, a loyal customer base, good
people, a strong balance sheet and much untapped potential. It is a business
underpinned by a clear commitment to robust ethical standards and to corporate
and social responsibility. We are proud to remain one of the most trusted of
major corporations in this country and only last week, Marks & Spencer was
awarded Business in the Community's Company of the Year for 2004.

What we must now do is to address, without delay, our key challenge - to restore
growth in sales and profits through delivering consistently excellent product,
style and value across clothing, home and food. To this end, your Board has
initiated significant reform. We have changed the management team, implemented
measures to improve operating performance and re-examined the Group's shape and
how it is financed. There is a great deal happening at every level of the
business. We know what needs to be done and we are doing it.

In December last year, Luc Vandevelde alerted us to the change in his personal
circumstances as a result of the death of his close friend Paul Louis Halley. He
told us that this would mean that he would have to honour, earlier than
expected, a commitment to the Halley family. This would require him to play a
significant role in representing their interests. In May, Luc indicated that he
wished to leave the Company's Board of Directors to focus on these other
interests. He told us that he would remain in position as Chairman for as long
as necessary to find and establish a successor. So we started the search for a
new Chairman - a search made all the more urgent by the increasing signs that
trading was below our expectations.

On May 27th, it emerged that a company called Revival Acquisitions, backed by
Philip Green and others, announced it was contemplating making a bid for Marks &
Spencer. Faced with the prospect of a bid clearly timed to take advantage of
both disappointing sales performance and the uncertainty over the Chairmanship,
the Board took two important decisions.

We decided that Luc should step down immediately. I was asked by the Board to
chair the Company. This I agreed to do, on an interim basis. I am taking no
additional remuneration for assuming this role - I see it as a duty to the
Company and you, the owners. One of my tasks will be to lead the process to find
an outstanding candidate as my permanent successor. The second important
decision was about the Chief Executive. We needed to ensure that Marks & Spencer
had the right executive leadership. The Non-Executive Directors on the Board had
already, prior to the Revival approach, formed the view that the Company's
progress towards restoring sales growth and driving improved operating
performance was too slow and had already spoken with Stuart Rose.

This opinion was crystallised by the approach from Revival Acquisitions. We
moved quickly to secure Stuart as your new Chief Executive to replace Roger
Holmes. The Board would like to thank both Luc and Roger for their efforts and
contribution. In many ways the Company they have left is in much better shape
than the one they joined.

Let me say a few words about Stuart Rose. We are delighted that Stuart has
joined us. We believe he is the right person to lead your Company at this time.
He has a rare retailing talent and an excellent track record. He achieved great
success at Argos, Booker and Arcadia.

Equally important, he knows, and is passionate, about Marks & Spencer, having
spent the first 17 years of his career with us, joining as a trainee in 1972. He
thinks, talks and acts like a shopkeeper. He has already been able to bring with
him some key colleagues - the start of building a new team. In particular, he
joined your Group with Charles Wilson and Steve Sharp, who have worked with
Stuart for more than a decade. Together they represent a formidable team.

Stuart's background meant he picked up the reins very quickly when he arrived
six weeks ago. He has wasted no time. Many important actions have already been
taken and a whole programme of significant change is under way.

This has been a period of intense activity for Stuart and his team. During this
time, as many of you will have read, Stuart has been the subject of a sustained
campaign to impugn his reputation and undermine his authority as Chief Executive
of your Company. We were therefore very pleased that last Thursday, the
Financial Services Authority announced that there were no on-going enquiries in
respect of Stuart, endorsing the Board's view that he had done nothing wrong. We
very much appreciate the FSA's speedy and professional response on this matter.

Now I would like to turn to the proposals we have received from Revival and the
Board's response to them. I think it would be worthwhile to explain the role and
responsibilities of a Board when faced with such proposals and explain the
process we went through before coming to a conclusion.

It is important that you understand that the Company has not received a bid from
Revival. It has considered three separate proposals. These proposals were made
on the condition that we give due diligence access and a recommendation. The
Board, on each occasion, had to consider whether the Revival proposal
represented fair value for a change in control of your Company. The Board and
our advisers gave each proposal very serious consideration.

Revival's most recent proposal is to make an offer of 400 pence per share, an
increase from the initial proposal of 290 to 310 pence per share, plus a 25 per
cent. interest in Revival's equity. Revival has announced that 400 pence per
share in cash (or 335 pence per share plus a 30 per cent. interest in Revival's
equity) is a final proposal which, under the rules of the Takeover Code, can
only be increased if another bidder makes an offer for your Company.

Your Board and its financial advisers believe that this final proposal of 400
pence per share in cash continues to undervalue the Group and its prospects
significantly and is confident it will have demonstrated this to shareholders on
July 12th. Accordingly, we would not be prepared to recommend an offer (if made)
at this level. You, our shareholders, can now make an informed assessment of the
Board's view. We believe it would be wrong for the Board, believing that 400
pence per share significantly undervalues the Company, to allow due diligence
access. Bear in mind that Revival Acquisitions cannot increase its proposal
following due diligence - it can try to reduce it.

Some people have asked whether we are depriving shareholders of choice. If a
bidder disagrees with a Board's view on value, the usual way for a bidder to
offer shareholders a choice is for the bidder to make a formal offer to
shareholders directly. This route was open to Revival and it has chosen not to
take it. We have also been asked what it would take to grant Revival due
diligence access. To do this we would need to be persuaded that your Board's
views about the future of Marks & Spencer and our belief in its value are
misplaced.

The approach by Revival Acquisitions has also thrown up questions about our
pension scheme. I know that some of you in the room will be members of our
scheme and will have been following carefully the debate on funding. As
disclosed in the Accounts, in the year to April 3rd 2004 we issued a bond of
£400 million to reduce a shortfall in pension funding and agreed additional
contributions with the trustees of £33 million annually from 2007 to 2015 to
close the deficit. The changes now being proposed by the Board, including the
return of £2.3 billion of funds to shareholders, are not expected to alter these
funding requirements since your Company is expected to remain investment grade.
It remains unclear what the impact on the funding would be if Revival were to
acquire Marks & Spencer. That is a matter for Revival and the Trustees. What I
can tell you is that this Board is committed to properly funding your pension
fund.

Before I hand over to Stuart I would like thank our 70,000 employees for their
commitment, enthusiasm and hard work during the year. Thank you.

We now reach the point you have been patiently waiting for as I hand over to
your new Chief Executive, Stuart Rose.

One final point, Stuart has not yet received the share options due to him
because Marks & Spencer is in an offer period. When they are issued, it will be
at the then current market price. However, to underline Stuart's confidence in
the future value of Marks & Spencer, he has undertaken to donate to charity any
profit between the grant price of his options and 400 pence. '

Contact details:
Corporate Press Office+44 207 268 1919

The Directors of Marks and Spencer Group plc accept responsibility for the
information contained in this announcement and confirm that, to the best of
their knowledge and belief (having taken all reasonable care to ensure that such
is the case), the information contained in this announcement is in accordance
with the facts and does not omit anything likely to affect the import of such
information.

Citigroup Global Markets Limited ('Citigroup') is acting for Marks & Spencer and
no one else in relation to the matters described in this announcement and will
not be responsible to anyone other than Marks & Spencer for providing the
protections afforded to clients of Citigroup nor for providing advice in
relation to the matters described in this announcement.

Morgan Stanley & Co. Limited ('Morgan Stanley') is acting for Marks & Spencer
and no one else in relation to the matters described in this announcement and
will not be responsible to anyone other than Marks & Spencer for providing the
protections afforded to clients of Morgan Stanley nor for providing advice in
relation to the matters described in this announcement.

Cazenove & Co. Ltd ('Cazenove'), which is regulated in the United Kingdom by the
Financial Services Authority, is acting for Marks & Spencer and no one else in
relation to the matters described in this announcement and will not be
responsible to anyone other than Marks & Spencer for providing the protections
afforded to clients of Cazenove nor for providing advice in relation to the
matters described in this announcement.



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