Final Results

Marks & Spencer PLC
22 May 2001


PART 1

                                PRESS RELEASE

                           MARKS AND SPENCER p.l.c.

                       PRELIMINARY RESULTS ANNOUNCEMENT

                      FINANCIAL YEAR ENDED 31 MARCH 2001


        Commenting on the Preliminary Results, Luc Vandevelde, Chairman and
        Chief Executive, said:

        'The results are in line with expectations. Sales of adult clothing
        during the period were unacceptable and it is this that led us to take
        many of the tough but necessary actions required to build a platform
        for recovery within our UK Retail business.

        We have many strengths to build upon. Food performance and its future
        potential are strong and we have growing Beauty and Home businesses.
        Together these account for half of our sales in the UK. Margins are
        improving and operating costs contained, providing important financial
        leverage in our earnings when we begin to recover clothing sales. Most
        importantly, the UK business has much clearer focus and direction to
        deliver adult clothing ranges of greater quality and appeal displayed
        in a better store environment. The results will not be seen overnight,
        but our customers will see a gradual and progressive improvement as
        the changes take effect.

        The focus this year is on effective execution, both of the corporate
        restructuring and the UK Retail recovery plan. I am committed to
        ensuring both are well executed, in the best long-term interests of
        our customers, shareholders, suppliers and staff.'



        FINANCIAL RESULTS

        Group

        Group sales were £8.1 billion (last year: £8.2 billion) and profit
        before tax and exceptional items £480.9 million. The 52-week
        equivalent profit last year was estimated at £517.2 million.

        Exceptional charges of £335.4 million have been made, predominantly to
        provide for the costs of corporate restructuring, announced on the
        29th March this year.

        UK Retail

        Turnover and operating profit, before exceptional items, were £6,293
        million and £334.8 million respectively, compared to last year's
        estimated levels (comparable 52 weeks) of £6,351 million and £386.8
        million.

        A trading update was given on 29th March 2001 covering the 51 weeks to
        24th March. A full-year sales analysis for the 52 weeks is given
        below, compared to the comparable 52-week trading period last year.
        Like-for-like sales are estimated by comparing total sales with new
        and developed stores excluded.

                          Actual sales % v 52     Like-for-like sales % v 52
                               weeks LY                    weeks LY

Clothing, Footwear and           -5.5                         -
Gifts
                                 +11.5
Home
                                ______                        -
Total General                    -4.2                        -6.3
Foods                            +3.7                        +2.6

                                ______                      ______
Total                            -1.0                        -2.6
                                ______                      ______


        At the year-end, total UK selling space was 12.4 million sq ft,
        compared to opening footage of 12.3 million sq ft.

        The average selling price of general merchandise was reduced by
        approximately 2.5%, which, coupled with a decline in the number of
        units sold of some 1.5%, contributed to the overall fall in general
        sales.

        Within Clothing, the results of better buying practices were seen in a
        substantially improved primary margin. The net achieved margin
        percentage improved over last year's level, despite a significant
        increase in the cost of mark-downs.

        Overall food inflation was in the region of 1%.

        UK - Operating costs

        The increase in UK Retail operating costs was contained to 3.2% (on a
        52-week comparative basis). The main components of the increase were:


     i. higher property-related costs as a result of the concept store rollout
        (£13 million);
    ii. merchant service fees payable on third-party credit card transactions
        (£9 million) and inter-company fees payable to the Financial Services
        Division for the acceptance of the Marks & Spencer Chargecard (£16
        million), this latter charge being treated as income in the results of
        the Financial Services Division. The charges date from the acceptance
        of third party credit cards in April 2000.


        International Retail

        The International Retail business consists of three broad geographic
        areas: Europe (including the Republic of Ireland but excluding the
        UK), North America and the Far East.

        The results from our franchise businesses, which, at 31st March 2001,
        operated 125 franchise stores in 26 countries, are also incorporated
        in the reported performance of International Retail.

        To allow proper comparison, financial information given below for
        financial year 2000 covers a 52-week trading period and has been
        calculated using constant exchange rates.

        (a)     Europe (excluding UK)

        An analysis of sales and operating profit is shown below.


                                         Turnover     Operating (Loss)/Profit
                                      2001 £m 2000 £m  2001 £m     2000 £m
Continental Europe                     285.0   278.6   (34.0)       (26.0)
Republic of Ireland and franchises     263.3   251.3    22.6         17.2
 Total Europe                          548.3   529.9   (11.4)        (8.8)


        At 31st March, 2001, the Group traded in 45 stores excluding
        franchises (last year 40 stores), covering 1,563k sq ft (last year
        1,517k sq ft).

        (b)     North America

        The Group operates two businesses in North America, Brooks Brothers
        and Kings Super Markets.

                                       Turnover             Operating Profit
                                 2001 £m       2000 £m     2001 £m    2000 £m

Brooks Brothers                   448.1         427.3        20.2       6.4
Kings Super Markets               313.1         294.6        11.9       11.8

Corporate Costs                     -             -         (0.1)      (2.8)

Total North America               761.2         721.9        32.0       15.4



        At 31st March 2001 Brooks Brothers traded in 221 stores (last year 222
        stores) on 1,011k sq ft (last year 991k sq ft); Kings Super Markets
        operated in 27 stores (last year 25 stores) and 453k sq ft (last year
        (430k sq ft).

        (c)     Far East

        Sales increased by approximately 4% to £110.1m (last year £105.9
        million), and operating profit to £7.4 million (last year loss of £4.8
        million).

        At 31st March 2001 we operated 10 stores in Hong Kong with aggregate
        footage of 202k sq ft (last year 223k sq ft).

        Financial Services

        Pre-tax profits were £96.3 million (last year £115.9 million). Within
        our Financial Services retailing activities (excluding the captive
        insurance company), pre-tax profits were £81.5 million (last year £
        106.6 million).

        The decision to accept credit cards in our stores last year led to a
        fall in sales transactions on the Marks & Spencer Chargecard from 26%
        of total sales to 22%. The interest rate on the Marks & Spencer
        Chargecard was reduced to a level comparable with third-party credit
        cards. Although this led to a substantial reduction in income,
        outstanding balances at the year-end were only slightly down from last
        year at £634 million (last year, £646 million). The overall impact on
        Chargecard profitability was reduced by the inter-company receipt from
        UK Retail (£16 million) and a reduction in operating expenses.

        Profits from loan products were down as lower margin new business
        replaced higher margin loans taken out in previous years. New advances
        increased by 5% to £949 million, despite increasing competition.

        Start up losses were incurred for Personal Lines insurance and
        Mortgage Protection Policies, both launched during the year.

        Exceptional items

        Total exceptional charges of £335.4 million have been provided for.
        Details are noted below.

        (a)     Continental Europe

        The Group has announced its intention to close its loss-making
        businesses in Continental Europe, subject to the full consultation
        which the Board recognised would need to take place. The decision to
        carry out any such plan would only be taken after this consultation
        has been completed with the competent employee representative bodies
        and if no other solution has been found during the consultation.

        Net closure costs of £224.0 million have been provided, covering
        future trading losses, losses on disposal of assets and redundancy
        costs.

        (b)     Direct

        A provision of £35.5 million has been made, consisting of £16.5
        million closure costs charged against operating profit and a £19.0
        million loss on asset disposals.

        (c)     Properties

        The closure of six satellite stores and the footage reduction in a
        further two stores (totaling 170k sq ft), already announced in
        November and taking place predominantly in the financial year 2001/
        2002, gave rise to a charge of £40.2 million. Since then, further
        charges have been made to provide for the development and disposal of
        approximately half of the Manchester store and the closure of stores
        in Salford, West Ealing and Torquay.

        The total provision for UK store closures and footage reductions
        (including the satellite closures) has therefore increased from £40.2
        million to £64.2 million.

        (d)     Other

        A provision of £10.0 million has been made against operating profit
        for Head Office restructuring costs.

        Capital expenditure

        Group capital expenditure (gross) was £255.7 million in the year just
        ended (last year, £450.6 million).

        Share Buyback

        Shareholder approval was given at the July 2000 AGM to buy back up to
        10% of issued shares. During the financial year, 10,619,272 shares
        were bought back (representing 0.4% of issued share capital) in the
        market for a total consideration of £20.3 million, at an average price
        of 190.8p.

        Dividend

        A final dividend of 5.3p (last year 5.3p) is proposed, making the
        total dividend for the year 9.0p (last year 9.0p).

        Current Trading

        A trading statement covering the first 14 weeks trading of this
        financial year, to 7th July, will be given at the time of our AGM on
        11th July.



        VALUE REALISATION, AND CLOSURE OF LOSS-MAKING BUSINESSES - UPDATE

        On 29th March 2001 the Group announced a recovery plan for UK Retail,
        together with the:

     i. release of value from almost half the property portfolio
    ii. sale of Brooks Brothers and Kings Super Markets in the US
   iii. intention to close the Continental European subsidiaries
    iv. franchising of our subsidiary in Hong Kong
     v. intention to close the Direct catalogue business in the UK
    vi. the return of £2 billion to shareholders by March 2002

        The corporate restructuring is underway and a brief update is given
        below:

        (a)     Property

        A series of measures from outright sale, to sale and leaseback and
        other forms of borrowing are under consideration to allow us to
        release value from UK operational and non-operational properties.

        (b)     Brooks Brothers and Kings Super Markets

        Morgan Stanley has been appointed to manage the sale of these
        businesses.

        (c)     Continental European subsidiaries

        A period of consultation with our staff is now underway in all
        affected countries. The timetable will reflect both the social
        legislative process in each country and the interests of our people.
        We will keep both our own staff and relevant external audiences
        informed of progress.

     i. Hong Kong


        An internal team is working, with advice from HSBC, to manage the
        transition to a franchise operation.

        (e)     Direct

        Contracts have been exchanged for the transition of our Warrington
        based call-centre to Vertex, a subsidiary of United Utilites.
        Discussions continue regarding the future of the fulfillment centre.


        APPENDIX

        This year's financial reporting period covers 52 weeks, compared to a
        53-week period last year. For comparative purposes, an estimate of
        operating profit (before exceptional items) for the 52-week
        comparative period last year is shown below. These comparatives are
        stated at actual reported exchange rates.



Operating Profit                                 2001   2000 52 wks 2000 53 wks
                                                   £m         £m          £m
UK Retail                                        334.8     386.8       420.1
                                                 ____      ____       ______

Financial Services                               96.3      115.9       115.9
                                                 ____      _____        ____
International Retail:
Europe                                          (11.4)     (9.4)       (6.1)
North America                                    32.0      14.0        16.4
Far East                                          7.4      (4.3)       (3.3)
                                                 ____      ____        ____

Total International                              28.0       0.3         7.0
                                                 ____      ____        ____

Excess interest charged to cost of sales of       7.9        -           -
Financial Services
                                                 ____      ____        _____
Total operating profit                           467.0     503.0       543.0
Interest                                         13.9      14.2        14.2
                                                 ____      ____        ____

Profit before tax and exceptional items          480.9     517.2       557.2
                                                 ____      ____        ____
Adjusted earnings per share                      11.4p     12.2p       13.2p

END



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