Interim Results

Marks & Spencer PLC
6 November 2001

                            MARKS AND SPENCER PLC

           INTERIM RESULTS FOR THE 26 WEEKS ENDED 29 SEPTEMBER 2001




HIGHLIGHTS

  * Group profit before tax and exceptional charges* up 20.1% to £220.3m.

  * UK Retail sales level, with second quarter sales up 2.8%.

  * UK Retail operating profit up 18.2% to £147.4m.

  * UK profitability increased by improved sourcing together with
    containment of operating costs.

  * Adjusted earnings per share* up 23.3% to 5.3p.


    * excluding the effect of Continental European trading losses of £26.4m,
    which were provided for last year.

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

'We are making good progress against the restructuring strategy and recovery
plan we announced at the end of March. Our focus on UK Retail is showing early
results and the restructuring programme is proceeding well.

The steps taken to strengthen the UK Retail team are beginning to deliver
results. In Clothing, we have had an encouraging response to the improved
appeal, quality and fit of our autumn merchandise, exemplified by the
successful launch of the 'Perfect' campaign, with its focus on classically
stylish merchandise for our core customers.

We continue to see the benefits from changes in the way we source merchandise,
with a further improvement in the Clothing buying margin being achieved at the
same time as offering better values to customers.

Our Food business has performed well. We lead the market in both product
quality and innovation and continue to explore ways of extending the reach of
our food offer. The trials of the 'Simply Food' format, small convenient food
only stores, have been successful and we are seeking further suitable
locations.

We have modernised a further 25 stores in the first half of this year as part
of the programme to create a more attractive, easy-to-shop environment for our
customers. We are on target to renew 100 stores by the end of this financial
year which, together with the concept stores modernised last year, will
represent two-thirds of UK Retail space.

To date we have closed the Direct clothing catalogue operation, announced the
sale and leaseback of 78 properties in the UK and are on track to complete the
sale of all our stores in Europe.

The trading pattern we reported in the second quarter has continued. The
economic outlook, however, remains uncertain as we approach the important
Christmas period. I am encouraged by the progress we have made and am
confident that the strength of the Marks & Spencer brand, together with the
value and quality of our improved offer, give us a firm base on which to
build'.

REVIEW OF THE BUSINESS

GROUP

Group turnover (net of sales related taxes) at £3,738.2m was marginally down
on the same period last year.

Group operating profit* at £215.9m increased by 24.6%.

The results for the Group include the results of those businesses we plan to
sell or close. If these are excluded, the turnover and operating profit for
the ongoing Group, consisting of UK Retail, Financial Services, Republic of
Ireland and Franchises, become:
                                                    26 weeks ended
                                                    29 Sept 30 Sept
                                                       2001    2000 % inc/(dec)
                                                         £m      £m

Turnover from retained businesses                   3,222.0 3,232.7       (0.3)
Segmental operating profit from retained businesses   200.5   184.3         8.8

Group profit before tax* increased by 18.7% from £179.7m to £213.3m.

Corporation tax has been charged at an effective rate of 31.6% (last year
33%). This year we are required to adopt the new accounting standard on
deferred tax. This has increased the effective rate of tax by approximately
1.6% (last year an increase of 2.0%).

Adjusted earnings per share* has increased by 23.3% to 5.3p (last year 4.3p).

The dividend is maintained at 3.7p and is covered 1.4 times.

Group cash flow for the period (before financing) is strong at £182.8m.


* excluding the effect of Continental European trading losses, which were
provided for last year.

UK RETAIL

UK Retail turnover (net of sales taxes) was level with last year.

UK Retail operating profit at £147.4m was 18.2% up on last year, as we
continue to see the benefits of more cost-effective sourcing and the
containment of operating expenses.

Sales performance for the first half (including VAT) is set out in the table
below. After declining by 3.4% on a like-for-like basis in the first 14 weeks,
sales grew at 2.1% in the following 12 weeks.
                                    % inc/(dec) on last year
                  14 weeks to 7 July  12 weeks to 29 Sept  26 weeks to 29 Sept
                 Actual Like-for-like Actual Like-for-like Actual Like-for-like

Clothing,         (9.1)                  0.8                (4.8)
footwear and
gifts
Home              (1.5)                  6.6                  2.0

General           (8.5)         (9.2)    1.3         (1.1)  (4.2)         (4.8)
merchandise
Food                5.9           4.8    4.9           3.4    5.4           4.2

Total             (2.6)         (3.4)    2.8           2.1  (0.2)         (1.0)

At the end of the period, we traded out of 310 stores, including 8 Outlet
stores. Total UK selling space at the end of the period was 12.3 million
square feet.

The second quarter Clothing sales performance was significantly better than
the first, with positive customer reaction to classically stylish autumn
ranges and the 'Perfect' promotion.

The Per Una collection was launched in 31 UK stores on 28th September and only
two days are included in these results; their effect is therefore negligible.
Since then, the range has been introduced to a further 23 stores. Initial
customer response has been very positive.

The performance of our Home business was adversely affected at the start of
the period by the announcement to close the 'Direct' clothing catalogue
business. This impact was short-lived and the Home business has subsequently
recovered helped by strong furniture sales.

In the first half, we reduced average selling prices for General Merchandise
by approximately 3.5% as part of our continued drive to offer outstanding
product at very good value. Volumes also declined in the first half of the
year by approximately 1.4%, but this was at a much reduced rate than
previously. Volumes have increased following the launch of the autumn ranges
in September and our market share has stabilised.

Sourcing improvements continue to deliver margin benefits against last year,
particularly in Clothing where we have delivered an improvement in excess of
three percentage points in the buying margin.

Our Food business continues to perform well. Sales benefited from inflation on
like-for-like products of just under 3%, a figure which peaked at over 4% in
May, but which has declined in recent months. During the period we opened two
new 10,000 sq. ft. stand-alone food stores in Milngavie (outside Glasgow) and
Sale. In July, we opened two 'Simply Food' outlets. Both trade on
approximately 3,000 sq. ft. Performance to date has been encouraging.

Operating cost increases in the first half were contained at 2.2%. These costs
include increased pension costs following the actuarial valuation of the
pension scheme (see note 5) and further expenditure on store modernisation.
These have been partially offset by savings in marketing costs (following
expenditure in the first half of last year to relaunch the brand) and cost
savings arising out of the closure of our 'Direct' clothing catalogue
operation.

We expect the increase in costs to be higher in the second half as we roll out
the renewal programme to more stores and anticipate the impact of performance
awards to employees which are linked to sales and profit targets. Overall we
estimate the full year cost increase to be approximately 3%. This excludes the
impact of the sale and leaseback transaction announced last week.

FINANCIAL SERVICES

Operating profit from Financial Services declined by £4.9m to £44.0m in the
first half. Within this, the operating profit from Financial Services
retailing activities was £41.5m (last half year £42.2m). The balance of the
decline in operating profit is attributable to our captive insurance company,
where the fall in world markets in September led to losses on the revaluation
of its investment holdings.

Customers' use of the Chargecard has stabilised at approximately 20% of sales,
following the acceptance of generic cards in stores last year. Customer
borrowings have remained stable at approximately £650m, with slightly higher
margins offset by a small increase in the provision for bad debts.

Gross profit from loan products is broadly in line with last year.


Start-up losses continue to be incurred for Personal Lines insurance and
Mortgage Protection products, which were launched towards the end of the first
half of last year.

We recently held a discount day in stores for our Chargecard holders which was
well received by existing cardholders and generated a high number of new
accounts. Our customers have shown significant loyalty to the card and work is
under way to identify an effective way of rewarding them.

Laurel Powers-Freeling has been appointed Chief Executive of Marks & Spencer
Financial Services and a main Board Director with effect from 6th November
2001.

INTERNATIONAL

Our International businesses fall into two categories: those we are retaining
(Republic of Ireland and Franchises); and those we have announced our
intention to sell or close.

Operating profits from our retained International businesses declined in the
first half, as a number of our franchise partners encountered deteriorating
economic conditions in their home markets. Our business in the Republic of
Ireland performed well.

We continue to record operating losses in Continental Europe, but these have
been offset by the release of the provision made last year and have had no
impact on Group operating profit.

In a difficult economic climate Brooks Brothers incurred a loss in the first
half, which was exacerbated by the events of September 11th. Our remaining
businesses, Kings Super Markets and Marks & Spencer Hong Kong, performed in
line with our expectations.

CASH FLOW

Cash inflow from operating activities at £397.2m has increased by over £200m
compared to the first half of last year.

The strong cash flow from operating activities, coupled with a reduction in
capital expenditure and the proceeds from sale of properties, has led to a
cash inflow before financing of £182.8m. Of this, £49.3m has been used to buy
back shares in the market.

Overall, net debt reduced by £135.5m to £1,142.3m at the end of the period.

RESTRUCTURING

In March we announced our intention to:

  * close the Continental European subsidiaries;
  * sell Brooks Brothers and Kings Super Markets;
  * franchise our business in Hong Kong;
  * close the 'Direct' clothing catalogue business; and
  * realise value from our property portfolio.

To date we have closed the 'Direct' clothing catalogue business; announced a
proposal to sell the French business to Groupe Galeries Lafayette and the
Spanish business to El Corte Ingles; and negotiated the sale of most of the
properties in Belgium, the Netherlands, Germany and Luxembourg.

Work continues on realising value from our property portfolio, the first part
of which was a sale and leaseback of 78 properties announced last week raising
£348m.

RETURN OF CAPITAL

It remains our intention to return £2bn to shareholders on a pro-rata basis in
March 2002.

                                     END







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Chairman:           Luc Vandevelde

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