Proposed return of GBP2bn

Marks & Spencer PLC
23 January 2002

                            MARKS AND SPENCER p.l.c.

                 PROPOSED RETURN OF £2 BILLION TO SHAREHOLDERS

On 29 March 2001, the Board of Marks and Spencer p.l.c. announced the
conclusions of a wide-ranging and detailed strategic review of the business,
including the intention to return approximately £2 billion to shareholders by
the end of March 2002.

Today Marks and Spencer p.l.c. announces the details of the return to
shareholders which will be achieved via a Court approved scheme of arrangement
and subsequent reduction of capital, through the introduction of a holding
company, Marks and Spencer Group p.l.c.. This pro rata return of capital will
help improve the potential returns on investment for our shareholders.

KEY POINTS

  • This return represents the equivalent of 70 pence per existing ordinary
    share.
  • For every 21 existing ordinary shares held at 5.00pm on 18 March 2002
    shareholders will receive 17 new ordinary shares and 21 B shares.
  • Shareholders can have their B shares redeemed for 70 pence each in cash on
    25 March 2002. Alternatively they can retain their B shares on which they
    will be entitled to a dividend of 75 per cent of 6 months LIBOR until such
    shares are redeemed. The next opportunity for shareholders to have their B
    shares redeemed for 70 pence each in cash is September 2002 and then every
    six months thereafter.
  • The return is conditional upon the approval of the shareholders of
    Marks and Spencer p.l.c. and the High Court.

Commenting on the announcement Luc Vandevelde, Chairman and Chief Executive,
said

'Today we are announcing the details of the return of £2 billion to
shareholders. It is a key element of the restructuring that we announced last
year. This will enable us to improve the potential for a faster rate of earnings
growth and create a more efficient balance sheet structure.

Our objective was to treat all shareholders in the same way. The proposals
achieve this and give them a choice as to when to receive cash.'

Shareholders will be sent a circular by 4 February 2002 setting out in full the
proposals. The return is dependent on shareholder approval at a Court Meeting
and an Extraordinary General Meeting both of which will be held on 28 February
2002.

The Company has established a helpline to answer shareholder questions on the
freephone telephone number 0800 035 2780 ([phone] if calling from
outside the UK) from 8.30am to 6.30pm, Monday to Friday. For legal reasons the
helpline will not be able to provide advice on the merits of the proposals or to
provide financial or taxation advice.

Further details of the return to shareholders and key dates in the proposed
timetable are attached.

For further information please contact:

Investor Relations:
020 7268 4195 or 6594

Corporate Press Office:
020 7268 8642

Duncan Hunter, Cazenove & Co. Ltd:
020 7588 2828

Shareholder helpline:
0800 035 2780 (Freephone)

DETAILS OF THE PROPOSED RETURN OF £2 BILLION TO SHAREHOLDERS

The return of approximately £2 billion will be achieved through the introduction
of a new holding company for the group, Marks and Spencer Group p.l.c., via a
Court approved scheme of arrangement and a subsequent reduction of capital.
Under the proposals, shareholders on the register at the scheme record time,
expected to be 5.00pm on 18 March 2002, will exchange their existing ordinary
shares for new ordinary shares and B shares in Marks and Spencer Group p.l.c. on
the following basis:

For every 21 existing ordinary shares held, shareholders will receive 17 new
ordinary shares and 21 B shares.

This ratio has been set by reference to the middle market closing price of 366.5
pence per existing ordinary share on 22 January 2002. On the basis of
approximately 2.8 billion ordinary shares in issue on 22 January 2002, the
number of new ordinary shares expected to be in issue will be approximately 2.3
billion.

Shareholders have two choices in respect of their B shares:

 i. an immediate 70 pence redemption on 25 March 2002;
ii. retention of their B shares with deferred 70 pence redemption.

Shareholders choosing the deferred 70 pence redemption will receive a
continuing, non-cumulative, semi-annual dividend at the annualised rate of 75
per cent of 6 months' LIBOR*, payable on the nominal amount of 70 pence per B
share. B shareholders will have the right to have their B shares redeemed on a
semi-annual basis in March and September.

The return of capital is conditional on obtaining the approval of Marks and
Spencer p.l.c. shareholders at a Court Meeting and an EGM (to be convened at
10.00am and 10.15am respectively on 28 February 2002) and the subsequent
approval of the High Court. Both meetings are to be held at the Paragon Hotel,
47 Lillie Road, London, SW6 1UD.

Marks and Spencer Group p.l.c. is undertaking a reduction of capital to create
further distributable reserves. This will allow the capital to be returned to
shareholders without using any of Marks and Spencer's existing distributable
reserves.

A circular setting out in full these proposals will be posted to shareholders by
4 February 2002.

*LIBOR is the London Interbank Offered Rate being the rate of interest at which
lending banks in the London market offer to lend sterling to one another.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Circular sent to shareholders                                 By 4 February 2002

Last date for receipt of forms of proxy                         26 February 2002

Court Meeting and Extraordinary General Meeting                 28 February 2002

Last day for dealings in existing ordinary shares                  18 March 2002

Scheme record time                                     5.00p.m. on 18 March 2002

New ordinary shares and B shares issued,               8.00a.m. on 19 March 2002
expected to be listed on  the London Stock Exchange 
and dealings expected to commence

Crediting of new ordinary shares and B shares to CREST accounts    19 March 2002

Court hearing of the petition to confirm the Marks and Spencer     20 March 2002
Group p.l.c. reduction of capital

Last time for receipt of USE messages from             4.30p.m. on 22 March 2002
CREST participants                                     

Latest time for receipt/revocation of                 6.00 p.m. on 22 March 2002
forms of election                                     

Despatch of cheques and proceeds credited to                    By 28 March 2002
CREST accounts in respect of the immediate 
70 pence redemption

New ordinary share certificates despatched                      By 28 March 2002

B share certificates despatched (as appropriate)                 By 3 April 2002

Any changes to this timetable will be the subject of a further announcement. Key
dates relevant to holders of American Depositary Shares may differ to those
above and will be set forth in the circular.

Copies of the Listing Particulars relating to Marks and Spencer Group p.l.c.
once approved by the UK Listing Authority (expected date 29 January 2002) will
be available, free of charge, by contacting the shareholder helpline (0800 035
2780) or alternatively by downloading them from www.marksandspencer.com.


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