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EVER end up having to try on clothes in three different sizes? You're not the only one.

Last week, a picture of seven pairs of "size 12" jeans went viral as it emphasised how different waistbands differ between stores.

Glasgow teen Chloe Martin, 18, tweeted the snap, saying: "No wonder women feel so insecure. I've had size 10 dresses that fit fine, then I'll try on size 14 jeans that won't even go past my hips. It's not right."

But it's not just jeans that are affected. We tried Chloe's method with other size 12 items of clothing and found measurements differed as much as 5in.

Dorothy Perkins, M&S and Next were frequently the most generous, while River Island and Topshop the smallest.

Here's how the High Street retailers measured up to one another.

Shirts

A. River Island, 17.5in shoulders, 22in waist, £35 - BIGGEST WAIST
B. Next, 17in shoulders, 21in waist, £30
C. M&S, 16.5in shoulders, 20in waist, £27
D. Topshop, 18in shoulders, 21in waist, £29 - BIGGEST SHOULDERS
E. Primark, 16in shoulders, 21in waist, £10
F. Dorothy Perkins, 16.5in shoulders, 19in waist, £22
G. New Look, 16in shoulders, 20in waist, £12.99
Difference: 2 inches on shoulders, 3 inches on waist

Skinny-fit jeans

T-shirts

A. M&S, 16in shoulders, 21in waist, £4.50 - BIGGEST WAIST

B. Next, 15in shoulders, 20in waist, £5.50

C. Dorothy Perkins, 20.5in shoulders, 19in waist, £6 - BIGGEST SHOULDERS

D. New Look, 16in shoulders, 19in waist, £7.99

E. Topshop, 17in shoulders, 18.5in waist, £15

F. River Island, 15in shoulders, 17in waist, £24

G. Primark, 15in shoulders, 16in waist, £2.50

Difference: 5.5 inches at shoulders, 5 inches at waist

Slip skirts

Trousers

Drastic measures needed
By Gabrielle Dirvanauskas, Fashion Editor
No wonder we can't just dash into a shop and grab something without tackling the changing rooms.

And it's no secret that different shops have different guidelines on sizing.

We all know that Zara and Topshop can be minuscule, while M&S often fools you into thinking you are a size smaller.

But it's shocking to see this demonstrated so clearly.

There is no law to say that retailers have to use the same measurements, which is very frustrating for shoppers.

It also means you can't shop online with confidence, as you never know how things will fit.

It would be easier for consumers if all brands used the same guidelines and it would save on time-consuming trips to the returns desk.

Last summer, major brands such as New Look, River Island and Next signed up to start using universal measurements, with software called Shape GB.

But it is a long way from coming into effect, and is on a voluntary basis with no obligation for companies to take part.
The sooner we can go shopping without having to try on three different sizes of the same item, the better.

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You won't believe how much a UK size 12 can vary in different stores

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EVER end up having to try on clothes in three different sizes? You're not the only one. Last week, a picture of seven pairs of "size 12" jeans went viral as it emphasised how different waistbands differ between stores. Glasgow teen Chloe Martin, 18, tweeted the snap, saying: "No wonder women feel so insecure.

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Exclusive to John Lewis & Partners

Exclusive to John Lewis & Partners

Free Click & Collect over £30 & free returns

View delivery & returns options

Material - 100% cotton

Care Instructions - Machine washable, Do not tumble dry

PRODUCT DESCRIPTION

A relaxed and versatile choice, this contemporary dress comes in a boat neck style with subtle circular gathered skirt seam. With two handy pockets at the side, it's finished at an easy to wear midi length.

Complete the look with ankle boots and a biker jacket.

By buying cotton products from John Lewis & Partners, you're supporting more sustainable cotton farming through the Better Cotton Initiative.

BCI is a not-for-profit organisation which exists to make global cotton production better for the people who produce it, better for the environment it grows in, and better for the sector's future. BCI works with partners around the world such as WWF, Solidaridad and Cotton Connect to train farmers to produce cotton more sustainably.

Better Cotton is sourced via a principle of "mass balance" and is not physically traceable to end products. However, BCI Farmers benefit from the demand for Better Cotton in equivalent volumes to those we source.
Learn more about mass balance here.

PRODUCT SPECIFICATION

Product Code - 68113801

Iron - Iron at max temp. 110.C

Washing Instructions - Machine washable

Country of Origin - Portugal

Sleeve Type - Three Quarter Length

Dress Shape - Fit and Flare

Length - Midi

Neckline - Boat Neck

Brand - Kin

Sustainable Material - Supports BCI

Drying Instructions - Do not tumble dry

Material Type - 100% Cotton

Pattern Details - Plain

Material - 100% cotton

Key Features

Material - 100% cotton

Care Instructions - Machine washable, Do not tumble dry

Description

A relaxed and versatile choice, this contemporary dress comes in a boat neck style with subtle circular gathered skirt seam. With two handy pockets at the side, it's finished at an easy to wear midi length.

Complete the look with ankle boots and a biker jacket.

By buying cotton products from John Lewis & Partners, you're supporting more sustainable cotton farming through the Better Cotton Initiative.

BCI is a not-for-profit organisation which exists to make global cotton production better for the people who produce it, better for the environment it grows in, and better for the sector's future. BCI works with partners around the world such as WWF, Solidaridad and Cotton Connect to train farmers to produce cotton more sustainably.

Better Cotton is sourced via a principle of "mass balance" and is not physically traceable to end products. However, BCI Farmers benefit from the demand for Better Cotton in equivalent volumes to those we source.
Learn more about mass balance here.

Free personal styling services

In-Store Appointments
Our Personal Stylists can help you find the perfect pieces for everyday or special occasions. Book an appointment in one of our shops for one-to-one advice.

Get one-to-one advice in our shops or via video call in the comfort of your own home.

What our clients have to say
"Laura put me at ease right from the start....I wouldn't have picked out Laura's selection for myself but I absolutely loved what she chose for me and bought most of what was on the rail!"

Virtual Personal Styling
Our Personal Stylists can advise via video call how to style your existing wardrobe differently and incorporate new pieces, all from the comfort of your home.

View all styling services

Product Specification

Product Code - 68113801

Iron - Iron at max temp. 110.C

Washing Instructions - Machine washable

Country of Origin - Portugal

Sleeve Type - Three Quarter Length

Dress Shape - Fit and Flare

Length - Midi

Neckline - Boat Neck

Brand - Kin

Sustainable Material - Supports BCI

Drying Instructions - Do not tumble dry

Material Type - 100% Cotton

Pattern Details - Plain

Material - 100% cotton

Free personal styling services

In-Store Appointments
Our Personal Stylists can help you find the perfect pieces for everyday or special occasions. Book an appointment in one of our shops for one-to-one advice.

Get one-to-one advice in our shops or via video call in the comfort of your own home.

What our clients have to say
"Laura put me at ease right from the start....I wouldn't have picked out Laura's selection for myself but I absolutely loved what she chose for me and bought most of what was on the rail!"

Virtual Personal Styling
Our Personal Stylists can advise via video call how to style your existing wardrobe differently and incorporate new pieces, all from the comfort of your home.

View all styling services

# data[].attributes.attachment_link.description
Exclusive to John Lewis & Partners Exclusive to John Lewis & Partners Free Click & Collect over £30 & free returns View delivery & returns options Material - 100% cotton Care Instructions - Machine washable, Do not tumble dry PRODUCT DESCRIPTION A relaxed and versatile choice, this contemporary dress comes in a boat neck style with subtle circular gathered skirt seam.

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This report looks at the online returns channel in the UK from 2018 to 2023. Consumers are becoming increasingly accustomed to returning items bought online, resulting in significant growth of the channel over the next five years. Retailers must give the returns process as much attention as deliveries in order to boost customer satisfaction and help retain customers. In this report we look at what people return, the methods used and the size of the channel split by parcel size for each sector. We also look at the profile and penetration of online shoppers who return, what drives them to return by sector and the cost of returns by sector.

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Main reasons for returning online purchases among consumers in the United Kingdom (UK) in 2020

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Main reasons for returning online purchases among consumers in the United Kingdom (UK) in 2020

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A survey conducted in July 2020 with 1,000 UK consumers, revealed that the main reason for returning items that were bought online was to do with fit issues. Around 66 percent of those polled in the study said they returned products because they 'didn't fit'.

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A survey conducted in July 2020 with 1,000 UK consumers, revealed that the main reason for returning items that were bought online was to do with fit issues. Around 66 percent of those polled in the study said they returned products because they 'didn't fit'.

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E-commerce returns: consumer reasons in the UK 2020 | Statista

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A survey conducted in July 2020 with 1,000 UK consumers, revealed that the main reason for returning items that were bought online was to do with fit issues. Around 66 percent of those polled in the study said they returned products because they 'didn't fit'.

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M&S.COM AND DIGITAL & DATA

The percentage of UK Clothing & Home sales online for 2019/2020 is 22.5 % this is an increase of 1.8%. (Marks and Spencers, 2020)

The traffic (visits per week) on their online website has increased by 9.5m, this is an increase by 8% from 2018/2019. (Marks and Spencers, 2020)

The Net Promoter Score measures the loyalty of customers to a company. M&S scores 57/100 this has increased from 54 for 18/19. (Marks and Spencers, 2020)

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We operate a family of businesses, selling high-quality, great-value own-brand products in the UK and internationally.

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Our returns and refunds policy answers all of your needs and FAQs. We also offer an online web chat service and a contact number for any further assistance.

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At a glance

In the face of an unprecedented global crisis, the best has been brought out of our 78,000 colleagues who have worked tirelessly to deliver for our customers.

Together we have strived to secure the future of the business and, as we emerge, our "Never the Same Again" programme will accelerate our transformation and fulfil our potential to deliver long-term, sustainable and profitable growth for our investors, colleagues and wider communities.

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Prior to the Covid-19 impact, both major businesses were making good progress in implementing the transformation programme. However, the trauma of the Covid-19 crisis galvanised our colleagues to secure the future of our business. We are determined to learn from our response to the crisis and accelerate our transformation to ensure that M&S is changed for good.

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50.5%-Percentage of UK Clothing & Home sales online

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Most popular products for instore and online

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Most popular products for instore and online

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Within categories, casual clothing, kids and home outperformed but not sufﬁciently to offset the adverse sales mix in areas such as formal clothing and holiday, with the categories in the right-hand table below accounting for c.18% of prior year sales.

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MARKS AND SPENCER GROUP PLC FULL YEAR RESULTS FOR 53 WEEKS ENDED 3 APRIL 2021

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2020/21 is a 53-week year. The comparative period is 52 weeks to 28 March 2020. To aid understanding, we are showing the unaudited 52 weeks to 27 March 2021 with commentary and percentage changes on a 52-week basis unless otherwise stated. Resilient ﬁnancial performance in a year of disruption

Proﬁt before tax & adjusting items of £41.6m (53 weeks £50.3m)

Statutory loss of £201.2m (53 weeks £209.4m)

Food LFL revenue up 1.3%, underlying LFL ex-hospitality and franchise up 6.9%

C&H revenue down 31.5%. Online growth of 53.9% partly offsetting stores down 56.2%

Group online revenue ex-Ocado now £1.5bn

Ocado Retail share of net proﬁt £78.4m

Net debt excluding lease liabilities reduced £278.6m to £1.11bn and strong liquidity

Forging

M&S Food growth supported by improved value perception and over 1,900 new lines

M&S products now over 25% of Ocado average basket and c.50% capacity growth planned

Clothing & Home business reshaped with shift to active and casual and more focused ranges

MS2 created to accelerate the shift to omni-channel with an online first approach

Sparks relaunch hits 10m members with substantially improved data capabilities

Accelerated opportunity to rotate the store estate into higher quality space

a reshaped M&S through the Never the Same Again programme Due to a change in the Group's accounting policy to recognise BACS payments at the settlement date, rather than when they are initiated, the comparative amounts for net debt and free cashflow have been restated. There are a number of non-GAAP measures and alternative proﬁt measures "APMs", discussed within this announcement and a glossary and reconciliation to statutory measures is provided at the end of this report. Adjusted results are consistent with how business performance is measured internally and presented to aid comparability of performance. Refer to adjusting items table below for further details. FORGING A RESHAPED M&S
Steve Rowe, CEO at Marks & Spencer: "In a year like no other we have delivered a resilient trading performance, thanks in no small part to the extraordinary efforts of our colleagues. In addition, by going further and faster in our transformation through the Never the Same Again programme, we moved beyond fixing the basics to forge a reshaped M&S. With the right team in place to accelerate change in the trading businesses and build a trajectory for future growth, we now have a clear line of sight on the path to make M&S special again. The transformation has moved to the next phase."

Our results for the year bear the impact of the pandemic spanning the beginning of the ﬁrst national lockdown through to near to the end of the third lockdown in the UK. However, they also reflect an acceleration of the transformation which enabled the business to deliver a resilient performance.
A resilient ﬁnancial performance in a year of disruption

The Group delivered proﬁt before tax and adjusting items of £41.6m and a statutory loss before tax of £201.2m in a year characterised by unprecedented lockdowns, resilient performance and disciplined management of costs.

We are grateful for total government support of £306.1m which has partly offset the effect of lost trade and enabled us to maintain employment.

Food delivered strong underlying LFL growth of 6.9% after adjusting for the closure of hospitality and the adverse impact on franchise sales. Operating proﬁt before adjusting items of £213.6m was a creditable achievement given the related effects on product mix.

Ocado Retail contributed a share of net income of £78.4m in an exceptional period for the business and following the successful switchover to M&S supply.

Clothing & Home results reﬂect the heavy impact of lockdowns on stores, a substantial change in product mix and the challenges of clearing stock, partially offset by very strong growth online of 53.9%. As a result, net revenue declined 31.5% and there was an operating loss before adjusting items of £129.4m. Performance improved in the second half as online growth made greater inroads into the store sales decline. Clothing & Home online generated an operating profit margin of c.14%.

International operating proﬁt before adjusting items of £45.1m was resilient due to online growth which helped to mitigate the pandemic impacts on store sales in different regions.

The balance sheet has emerged stronger than expected. Lower discretionary costs and capex, managed stock ﬂow and a focus on working capital resulted in net debt excluding lease liabilities down £278.6m to £1.11bn and a strong liquidity position.

In the ﬁrst section of this statement, we explain how this performance was delivered. We then outline how we have used this period to accelerate transformation under the Never the Same Again programme to ensure a reshaped business emerges from the crisis. Finally, we lay out our medium-term ambition for the Group's businesses and expectations for the year ahead.
A reshaped M&S emerging from the pandemic period
This resilient performance is due to the extraordinary efforts of colleagues across the business, playing their part to feed the nation, increase our capacity for home delivery and work with our trusted suppliers to adapt to rapidly changing restrictions across the year.

Over the past three years the objective of the transformation has been to restore M&S to sustainable growth through 'facing into the facts' the business had failed to address. The transformation has included shifting to trusted value and broadening the appeal of our ranges in Clothing & Home and Food, investing in online and digital capability including establishing the investment in Ocado Retail and tackling both the high cost and outdated supply chains and the legacy store estate.

Broadening M&S Food appeal: The Food business is broadening its appeal through more relevant family focused innovation and improved value perception led by over 340 'Remarksable value' lines which now represent c.10% of volumes. Growth is supported by a significant cost reduction programme including synergies from growth on Ocado, systems upgrades to reduce waste and the Vangarde supply chain programme which is delivering better availability.

Transition to M&S product on Ocado Retail completed successfully: Penetration of M&S lines on Ocado is consistently over 25% of the Ocado basket, outperforming Waitrose. The next stage is to grow capacity by c.50% in the next 18 months and to realise further potential from the joint venture with our partners Ocado Group.

Omni-channel Clothing & Home business emerging: Substantial reshaping has created a 'product engine' providing a contemporary, focused M&S range. In addition, complementary external brands have been successfully launched. The creation of MS2 has brought together the data and online teams to prioritise online trading and growth while leveraging the advantages of our store estate more effectively. MS2 draws on the data engine and the relaunched Sparks loyalty scheme which has grown to over 10m members, enabling a more personalised relationship with customers.

Accelerated rotation of the full line store estate: The drag on performance of the legacy estate has been exacerbated by Covid bringing forward the decline of some locations but also creating opportunities for rotation. We are increasing the speed of change to create a group of well-invested full-line stores in c.180 prime and core markets. The costs of the rotation programme will be largely funded by the release of cash from the development of freehold and long leasehold sites.

An International business focused on major partnerships and online: Online sales doubled in 2020/21 and we are now investing in increasingly localised fulfilment, expanding our presence on marketplaces such as Zalando and the launch of additional websites such as the 46 markets announced in March. Digital trading improvements, partner store modernisation and supply chain development are positioning the business for rapid recovery as lockdowns end. Following Brexit, the business is reconfiguring trading with its EU businesses to reflect the challenges of exporting to the EU.

Business positioned well for the medium-term despite near-term headwinds
From the start of the pandemic we recognised that it would accelerate market trends providing an opportunity to bring forward transformation to emerge as a reshaped business.

Overall trading for the first six weeks of the financial year and since reopening has been ahead of the comparable period two years ago in 2019/20 and our central case. Core Food is in strong growth although hospitality and franchise remain adversely affected, with Clothing & Home sales growing since reopening and online remaining robust. International sales continue to be impacted by on-going restrictions, particularly in India.

While encouraging, it is unclear how the recovery will develop and if consumer activity will sustain. International markets continue to face headwinds with ongoing disruption and the material costs of Brexit which we are working to mitigate. At this early stage our central case is that we will generate profit before tax and adjusting items between £300-350m and as capital expenditure recovers towards pre-pandemic levels, our ambition is for a further reduction in net debt.
1. A RESILIENT FINANCIAL PERFORMANCE IN A YEAR OF DISRUPTION
We have a clear path to a transformed business in the medium term. The priority is to fund investment in building omni-channel capability, including investment in the supply chain, store rotation and maintenance of our changing estate. As we recover balance sheet metrics consistent with investment grade, we will assess the reintroduction of dividend payments, although as we focus on restoring profitability this is unlikely in the current year.

The reporting period spans the year from the beginning of the ﬁrst UK-wide national lockdown in March 2020 to the end of the third lockdown in April 2021. In most of this time our operations have been severely constrained by the change in day-to-day living, the effects of social distancing and partial or full closure of large parts of our store estate. This has resulted in substantial changes to the mix of products customers have bought and a wide divergence of store formats and channels.
On an unaudited 52 week basis to 27 March 2021 except where stated 2 Items shown on a 53-week basis. Due to a change in the Group's accounting policy to recognise BACS payments at the settlement date, rather than when they are initiated, the comparative amounts for net debt and free cashflow have been restated Strong underlying Food performance - LFL ex hospitality and franchise up 6.9%
The group has delivered a proﬁt before tax and adjusting items this year of £41.6m, compared with £403.1m last year. Statutory loss before tax was £(201.2)m respectively on a 52 week basis (£(209.4)m on a 53 week basis), compared to a statutory profit before tax in 2019/20 of £67.2m. Strong free cashﬂow has driven a healthy reduction in net debt. The substantial effects of reduced sales and directly attributable covid related costs of £269.6m as a result of the pandemic were only partly offset by government support of £306.1m.

M&S Food delivered strong underlying LFL growth of 6.9% after adjusting for the closure of hospitality and the adverse impact on the franchise business. Total sales were down (0.6)% and operating proﬁt before adjusting items of £213.6m reﬂected the negative effects of product mix. The trading impact on the convenience and hospitality businesses together with the effect of Covid related costs was only partially offset by government support and cost saving programmes.

The strong underlying LFL growth was delivered in the face of further additional headwinds, including the exposure to ofﬁce and shopping centre locations as illustrated below. Unlike some competitors M&S Food sales as reported do not beneﬁt from a direct online grocery presence, with these sales reported through Ocado Retail instead. The change in shape of trade is illustrated in the table below with the adversely affected areas collectively accounting for c.37% of prior year sales.

Lockdown also resulted in steep declines in convenience categories such as food-on-the-move and initially in prepared meals given reduced footfall as customers switched to home cooking. However, the repurposing of space towards core categories such as grocery, household, and meat, ﬁsh and poultry, together with the continued transformation of our ranges and value position helped to offset the loss of convenience trade. The adversely impacted categories together accounted for around a third of prior year sales.

The Group had a good Christmas and a very strong Easter in 2021, which fell into week 53 of the ﬁnancial year.
Exceptional Ocado Retail contribution to results
The Food business incurred extra costs to support customer and colleague safety of £49.4m and incentives for non-furloughed colleagues working through the pandemic of £22.0m. In addition, £9.9m of costs were incurred as a result of Brexit, which are set out in further detail below.

Ocado Retail delivered 43.7% revenue growth over the 52 weeks ended 28 February 2021 and contributed a share of net income of £78.4m.

This has been an exceptional period for grocery online and Ocado Retail performed strongly. Higher than normal basket size and a smoothed trading proﬁle across the week together with reduced marketing costs delivered a strong improvement in profitability. The overall result included the Group's share of insurance receipts related to business interruption at the Andover customer fulﬁlment centre (CFC).
Accelerating online sales growth of 53.9% partially offsetting store decline of 56.2% in Clothing & Home
The well-planned switchover to M&S supply from Waitrose in September 2020 went smoothly with a positive customer response and the M&S share of basket has exceeded the Waitrose level prior to switchover.

The overall Clothing & Home result for the year was heavily impacted by lockdowns, on-going social distancing, steep decline in formal and occasionwear, the location of many of our stores in town and shopping centres and the priority to clear stock. As a result, total revenue declined 31.5%.

As we implemented MS2 and took multiple steps to improve online operating performance we were able to capitalise on the change in customer shopping patterns and saw a progressive increase in online sales and market share growth through the year. This was a result of strong trafﬁc, active customer growth, improving frequency and lower returns. The business had a good service and fulfilment performance supported by previous investment in the Castle Donington distribution centre and substantial expansion of fulfilment from store capability.

As reported for Food, stores in high streets, shopping centres and city centres created an extra drag on sales performance, with these channels representing c.70% of prior year store sales.

Within categories, casual clothing, kids and home outperformed but not sufﬁciently to offset the adverse sales mix in areas such as formal clothing and holiday, with the categories in the right-hand table below accounting for c.18% of prior year sales.
Resilient International proﬁt as a result of franchise partnerships and strong online growth
Clothing & Home recorded an operating loss before adjusting items of £129.4m as lower sales were only partly offset by reduced operating costs. Losses substantially reduced in the second half as the actions we took to accelerate online growth partly compensated for losses in store. Overall, Clothing & Home online generated strong profitability, with an operating margin of c.14%, for the year. Conversely, the operating loss in stores represented a margin on sales of c.(26)%. Stringent action to reduce or postpone orders from suppliers together with measures to hibernate a small amount of stock resulted in a relatively clean stock position by the end of the year.

International sales reﬂected the pandemic impact and lockdowns across markets partly offset by the strong shift to online sales. Clothing & Home sales declined 21.6% at constant currency, largely driven by lower store sales in the Republic of Ireland and India and working with franchise partners to manage the effects of the pandemic. This was partly offset by online sales which more than doubled. Food sales, down 9.4% were more resilient particularly in the Middle East and Asia as Covid refocused customer demand to favour eating in. This helped to offset a weaker performance in travel franchise sales in Europe and disruption from Brexit in quarter four.
Relaunched Sparks loyalty scheme and M&S Bank customer offer
Operating proﬁt before adjusting items of £45.1m reﬂects in large part the lower Clothing & Home sales. The International business also incurred Brexit related costs of £6.2m in the year.
Balance sheet strengthened
We relaunched the Sparks loyalty scheme in July shifting from a points-based plan which was delivered through a physical card, to a more customer friendly digital experience. Since relaunch total membership has grown to over 10m customers. The new Sparks operates on the M&S app and enables M&S to create a more personalised relationship with members as opposed to the traditional model of targeted promotions. Alongside Sparks we are repositioning the M&S Bank, closing down the branches and moving away from traditional banking accounts, focusing instead on credit, currency services and payments.
Adjusting items reﬂect cost restructuring and the accelerated store rotation programme
At year end, the Group's net debt excluding lease liabilities declined by £278.6m and total net debt was down £434.7m. Although profitability was significantly reduced by the impacts of the pandemic, cashflow was preserved through a combination of actions to improve working capital including new terms with suppliers, adjustment to arrangements with landlords, reduced discretionary costs, careful management of capital expenditure and government support. During the period, the business strengthened its overall liquidity position by reducing net debt, refinancing its 2021/22 debt maturities and managing its standby liquidity facility with its banks.
2. A RESHAPED M&S EMERGING FROM THE PANDEMIC PERIOD
We have reported adjusting items of £259.7m for the 53-week period (52 weeks: £242.8m). Significant charges of £133.7m relate to the costs of organisational change including the restructuring of operations announced in the summer of 2020 and in the Republic of Ireland. We expect the restructuring of operations to generate annualised cost savings of at least £115m. We have also provided £95.3m for accelerated depreciation and impairment as we increase rotation of the estate to address the drag of legacy stores unsuitable for modern trading or in declining locations. A charge of £79.9m has been recognised for intangible asset impairments, offset by a £90.8m gain largely relating to the release of a portion of the Covid inventory provision made in the prior year.
M&S Food positioned for growth
Over the past three years the objective of the transformation has been to restore the business to sustainable growth. We have substantially reduced promotions and shifted to trusted value to broaden the appeal of our ranges, invested in online, data and digital capability, established the Ocado Retail joint venture and also tackled the legacy store estate and created more efficient operations. However, from the outset of the pandemic we recognised it would accelerate market trends providing an opportunity to bring forward transformation through the 'Never the Same Again' programme to emerge as a reshaped business.

The objective for Food is to 'protect the magic' by investing in our unique focus on own brand innovation and fresh, easy to cook food and growing through larger more inspirational stores, while modernising the cost base and supply chain. With strong customer perceptions on quality and a reputation for innovation and trust, yet a small market share, the business has a substantial growth opportunity.

Protecting the magic: The M&S Food range is built from deep supplier relationships and strong product knowledge to drive a high level of innovation. Over the past year we created over 1,900 new lines broadening appeal in healthy and family product. This included expanding Dine-In to feed a family of four and building on our strengths over key events. To help create next generation ideas a "Food Innovation Hub" has been established bringing together packaging, product innovation and nutrition in areas such as plant-based protein and sustainable packaging.

Delivering better value: The aim for M&S Food is to always be great value, with better quality and ingredient content more than compensating for any difference in price. We have extended our position on trusted value by expanding the range of 'Remarksable Value' staple lines at an everyday low price to over 340 products, which now account for c.10% of volumes. This has supported a further improvement in value perception which is now at its strongest level in almost three years.

Larger and more inspirational stores: Food renewal aims to create larger stores with the efficiency of a supermarket and the 'soul' of a fresh food market and has this now been implemented in 15 stores with current year openings and renewals raising the total to around 40. These stores offer increased produce, bakery, ambient grocery and frozen ranges in an inspiring environment. The initial trial stores outside Covid affected city centres grew sales 15% last year.

Moving to digital marketing and sales: Food marketing has shifted focus away from conventional activity towards high impact brand building and increased social media engagement, which helps create a new shop window to the brand and reach new audiences. As a result, while we have reduced marketing spend and promotional activity is down substantially, the spend on social media and digital marketing has increased by c.35% on the prior year.

Food-on-the-move and hospitality: Despite the impact in office locations during Covid, we expect our sales in food-on-the-move to recover over time with further opportunities for growth through new channels to market. In addition, the M&S café offer has now been refreshed and simplified and this year will implement modern quick to serve menus, which are lower touch to prepare.

Upgraded systems: High waste and low availability in some instances reflects a cumbersome and under-invested supply chain and high touch forecasting and range management systems. We are now commencing a programme to upgrade core systems to reduce manual intervention and improve accuracy and efﬁciency. This includes updating forecasting and ordering technology with an objective of reducing waste by more than 10% and we are replacing the space, range and display system, improving the tailoring of ranges to store.

Rolling out supply chain improvements: The Vangarde programme is now operating in c.350 stores served by five depots with sales uplifts from the ﬁrst depot at over 3% compared with control stores, partly as a result of improved availability. We will be rolling this out to the full estate over the rest of this year. To grow ambient ranges and larger baskets we have opened a new depot in Milton Keynes enabling growth of 13% over Q3, with the next phase of capacity planned for 2021/22.
Ocado Retail bringing multi-channel to M&S Food
Lower cost to operate: We have now delivered over £180m of cost of goods savings over the past two years to help mitigate inﬂation and enable the investment in trusted value. This includes optimising volume with strategic suppliers, reducing packaging costs and respecifying ingredients. Increased volumes as a result of the Ocado switchover generated over £20m of synergies which was more than planned. In addition, current year operating costs will also benefit from the savings from restructuring retail operations announced last year.

The investment in 50% of Ocado Retail combined with the switchover to M&S own brand positions the business for a multi-channel offer working closely with our Ocado Group partners. The transition from Waitrose to M&S product has gone well with M&S consistently over 25% of the Ocado basket and around half of Ocado fresh category sales. The next stage is to aggressively grow capacity and to create further opportunities for both joint venture partners.

A new fulﬁlment centre (CFC) was opened in Bristol in March and additional CFCs in Purﬂeet and Andover will open later this year. These CFCs alone will provide an eventual 40% increase in sales capacity at full utilisation.

Further investments to increase the reach of the business into parts of the UK that Ocado Retail does not currently serve fully are likely in the months ahead. In addition, it plans to open more than 12 Zoom sites expanding its immediacy proposition across London and major UK cities.

Ocado Retail is investing in c.50% increase in peak day capacity over 18 months which will help meet unfulﬁlled demand.
A reshaped omni-channel Clothing & Home business
Over the past year Ocado Retail has beneﬁted from the powerful combination of strong demand as a result of Covid which enabled it to operate at maximum capacity with a smoothed shape of week, generating a very strong proﬁt contribution. In the current year we expect some reversion of demand patterns and a reduction in average order value leading to a more normalised set of economics.

Our objective is to deliver an omni-channel Clothing & Home business in the UK, backed by exceptional data and highly personalised customer relationships. All channels will be driven by a 'product engine' providing a more contemporary focused M&S range bought in greater depth alongside a family of internal and external partner brands with distinctive appeal to our customers.

A strengthened Clothing & Home 'product engine':

Over the last three years huge strides have been made in reshaping ranges around new trading principles, most notably to buy fewer lines in greater depth from fewer strategic suppliers. The extent of the shift has been obscured by Covid and the related trading turmoil, but we believe there is a marked improvement in style, shape of buy and value. For instance, by Autumn 2021 total option count is expected to be around a quarter lower than 2018 with the team implementing new range management tools to maximise rate of sale of each option, and we are planning further option count reductions in several areas

Following an initial phase when customers replenish their wardrobes, we expect a permanent shift in demand to include a reduction in formalwear and tailoring. With that we have shifted focus to growth areas such as the new ofﬁce smart wear, kids casual ranges and the Goodmove athleisure range. Goodmove delivered an exceptional performance over the past year recently achieving a number one retailer market share in full price sales in the category and has now been expanded from women's into men's and kids.

The emergence of platforms and the increasing cost of online customer acquisition for smaller retailers creates an opportunity for M&S to leverage its customer base, infrastructure and Sparks to partner with guest brands on the M&S platform. We can offer time pressured customers a curated group of value for money, contemporary, stylish brands with sustainability credentials. During the year we introduced guest brands for the first time and now distribute for an initial group of 21 partners. Results have been very encouraging with further substantial growth planned. In January we also acquired the Jaeger brand for £6m. Its historical reputation for innovation in natural ﬁbres, British sourcing and distinctive style provides a complementary addition to the M&S range.

MS2 as the integrated online and data business driving omni-channel growth:

Growth in the past year means Clothing & Home now has a base of over 9.0m active online customers making it one of the largest platforms in the UK. With that we have an objective to achieve in excess of 40% of Clothing & Home revenue through online in three years' time.

To take full advantage of this opportunity MS2 was created to prioritise online and leverage the store estate in a more effective way. The MS2 plan is able to draw on the Group's customer data engine and relaunched and enlarged Sparks loyalty programme to create a powerful insight tool and more personalised relationships with customers.

The MS2 plan focuses on three core objectives:

Improving the online offer: Our priority is to increase availability in the online channel from historic levels of c.80% in recent years. In addition, we will be introducing online only ranges, recognising the different rate of sale across channels including trialling 'test and repeat' products. Given that around one third of the M&S range is year-round product, we will also expand best seller and 'never out of stock' initiatives. Combined with a curated range of third-party brands we expect a substantial improvement in the online offer in the coming year.

Creating a digital-led customer experience: Recognising that a mobile-led customer experience is central to online success we are increasing investment in optimising M&S.com for mobile and growing the M&S app, which generated over 3.5m downloads last year as we relaunched Sparks. In addition, within the app we have built digital services such as scan and shop, to pay in store by phone and video powered retail services such as bra fit, beauty and furniture sales. In the summer M&S Bank also plans to launch a digital credit option.
Accelerating rotation of the store estate
Maximising M&S's omni-channel advantage: Unlike pure play retailers, M&S has an advantage in its store network which provides an opportunity for rapid collection and returns and drives incremental in-store sales. Investment in Castle Donington, expansion of our site at Bradford and the repurposing of the Thorncliffe warehouse means that M&S has sufficient capacity for online deliveries for the next 2-3 years. Following the restructuring to reduce store costs last year and the success of buy online ship from store, we are investing in technology improvements to enable a low-cost rapid click and collect offer from store stock. In addition, as part of the omni-channel strategy we have launched ﬁve '10x' stores. In these stores we are targeting a substantial increase in the use of digital services such as contactless click and collect and returns and digital payment, as well as specific benefits for Sparks members.

A continued headwind to M&S brand perception and performance is the legacy estate of full line stores (selling both Clothing & Home and Food) often in declining locations or centres, with inefficient space which is difficult to shop and costly to replenish. We have already closed or relocated 59 full line stores, 16 food stores and 8 outlets, but the effect of the pandemic means we can move faster. There has rarely been a better time to acquire new replacement stores on good terms and we are planning 17 new or expanded full line stores over the next two years, including a number of former Debenhams sites, with the pipeline continuing to grow. While long leases have historically constrained our ability to rotate, we plan to largely fund future closure costs through the disposal for redevelopment of freehold and long leasehold properties.

Framework for rotation: M&S had 254 full line stores at year end. While practically all Clothing & Home departments in these stores contribute positive cash, a number are in long term decline, struggle to cover their allocated central costs as a percentage of sales and cannot justify future investment.

Around 100 stores in prime retail markets growing from the current base of c.80. In these markets we will invest in renewal, redevelopment, or replacement of existing stores.

Around 80 stores in core markets, growing from the current base of c.65 stores through investments such as the relocation of high street units to retail parks.

In c.110 remaining locations we will rotate the estate. This will mean either relocating to a Food only store or another full line store as above or consolidating multiple stores into one. In around 30 locations which can no longer support a store we will close, recapturing trade in nearby stores or online.

Our objective for the full line estate is to achieve a fully modernised core of c.180 stores. Our current best view of the future estate based on stress tests, regional modelling and current retail and efficiency requirements is as follows.
1Metrics for 2019/20 adjusted for covid impacts in March 2020. Leasehold stores exclude long leaseholds.
The overall benefit of well-located space is illustrated by the profitability metrics of each group shown below. The average Clothing & Home cash contribution margin in 2019/20 of prime leasehold stores was 25% of sales or £3.0m per store. This is a higher margin and more than 3x the cash contribution per store of those out of which we plan to rotate.

The financial benefits of rotation are compelling, for instance the table below illustrates the returns from consolidating Northampton and Kettering stores into one at Rushden Lakes Retail Park prior to the pandemic. The previous stores were ageing, with sales in decline and no investment case to bring them up to standard. The new retail park, built between the two towns incorporates shopping, dining and leisure facilities on a site with good access and car parking. The disposal of the freehold of one store helped to fund the closure and the lease costs of the remaining term of the other. The new store has generated a substantial cash profit and LFL sales were in growth pre-Covid. The net investment cost of the new store was £2.1m resulting in a strong payback on the net capital invested.

The pace of rotation: To reduce investment risk and maximise returns to shareholders we have set a target payback for relocations including recapture of less than 4 years, with standard lease terms of 10 years. Returns outside of these parameters are considered where they enable an exit of long-term liability or in exceptional locations.

We will work with landlords to negotiate appropriate terms at exit and repurpose or develop space. However, in some cases it will be more economic and brand enhancing to have a vacant store than lose the opportunity to move to a better location. Reflecting this at year end further charges of c.£268m are estimated over the life of the programme including for accelerated depreciation and impairment. When combined with the operational costs of closure we currently expect to incur total cash costs of c.£260m over the remaining period.
International business focused on major partnerships and online
Funding the rotation: We have a number of freehold and long leasehold properties, which offer an opportunity to fund rotation through the release of cash from development. This includes the Marble Arch proposal and additional stores including a number for residential development. These properties tend to be in locations where land values for alternative use are higher than for existing use. We have an objective to release at least £200m from these projects.

The International business has an objective of delivering market relevant product, great digital service for partners and driving growth online through MS2. Based on strong performance last year we have an ambition to more than double international online retail sales. This will be delivered by investing in digital marketing, expanding categories further with major marketplaces and entering into new markets such as the 46 countries announced in March. As the business scales we expect to build fulfilment capacity to drive more rapid customer service and lower costs.

Launching a fully digital showroom. This transforms partners' ability to create curated ranges relevant to their markets and plan ﬂoors, windows and campaign without the cumbersome and costly buying fairs previously held.

Driving faster rotation of the store estate with new digitally enabled stores. This includes a ﬁrst '10x' trial, offering partners omni-channel innovations such as digital ﬁtting room assistance and self-checkout.

Creating a UK hub for export at Hemel Hempstead. This avoids the need for International stock to enter the UK network where it is broken down for storage and keeps product consolidated for onward shipment. In addition, partners will have the facility to collect stock regularly rather than receiving infrequent shipments.

EU markets post Brexit
We are also modernising operations and digitising our trading interface for partners. This includes:

The most challenging effect of the Brexit deal is to make the supply of fresh and chilled product, especially prepared food, into the EU very lengthy and bureaucratic creating an enduring impact on availability and trading costs. This situation is unlikely to improve in the near term and we therefore need to reconfigure trading with our EU businesses. The most significant impact is on our Food operations in the island of Ireland and we are implementing multiple medium-term solutions to stabilise the business in both the North and the Republic. We have already modified food export into the Czech Republic and are working with our partners in France to review the model. While these operations are relatively small in the context of the Group, changes to our EU businesses as a result of Brexit related costs may result in future restructuring charges.
3. BUSINESS POSITIONED WELL FOR THE MEDIUM-TERM DESPITE NEAR-TERM UNCERTAINTY 2021/22 a year of recovery
See table in the following section for details of current expectations of cost impacts in 2021/22.

Overall trading for the first six weeks of the financial year and since reopening has been ahead of the comparable period two years ago in 2019/20 and our central case. Core Food is in strong growth although hospitality and franchise remain adversely affected, with Clothing & Home sales growing since reopening and online remaining robust. International sales continue to be impacted by on-going restrictions, particularly in India.

While encouraging, it is unclear how the recovery will develop and if consumer activity will sustain in Clothing & Home as well as what the eventual pace and shape of recovery in hospitality and convenience in Food will be. We have a strong programme of capacity growth at Ocado Retail although we expect some normalisation of shape of week with respect to its economics. The business also continues to face headwinds with ongoing disruption in various International markets, both the Clothing & Home and Food supply chains and the costs of Brexit.

Our central case for the current year therefore assumes a gradual return towards more normal customer behaviour in stores in Clothing & Home and hospitality and franchise in Food. With that, we are assuming the receipt of business rates relief in line with government guidance. Our scenario does not assume further lockdowns.

In this central case UK costs normalise to levels broadly consistent with 2019/20 underpinned by the benefit of the restructuring announced last year, which will largely offset an increase in base pay rates, costs related to transformation and higher variable costs such as online fulfilment.

The business is now exposed to additional costs following Brexit, largely due to the administrative burden on exports of food, particularly to the island of Ireland. This includes additional supply chain costs at Motherwell and Faversham depots, as well as costs of a digital track and trace platform, additional variable cost per tray, veterinary certification, and costs of change. Potential tariffs relate to duty on exports of Clothing & Home and elements of the Food catalogue into the EU.

The total estimated cost impacts for the business are shown below, c.£27-33m of which relate to operations on the island of Ireland. We have provided a range of potential tariffs depending on the solutions implemented. We are also working on longer term initiatives including a review of European business models, local sourcing and re-routing product through European hubs.

Capital investment for the Group will increase to similar levels to 2019/20 as we invest in the transformation, restart a programme of store maintenance and accelerate rotation.
A path to a transformed business in the medium term
Our central case is therefore that we will generate profit before tax and adjusting items between £300-350m and our ambition is for a further reduction in net debt.

As the business emerges from Covid, we have an ambitious plan for future growth with a clear path to a transformed business.

Food is delivering growth in core categories with larger baskets and is now positioned to expand further in convenience, build sales through larger renewed stores and progressively improve profitability. In addition, Ocado Retail has already announced plans which will increase peak day capacity by c.50% and has a structurally profitable long-term model for growth.
Capital Allocation to prioritise the transformation
In Clothing & Home the new buying approach and expanded online capability is gaining traction with customers. We have more active online customers and stores are positioned for recovery. We are targeting in excess of 40% of Clothing & Home revenue online in three years, with an overall operating margin ahead of 2019/20 levels. International has ambitious plans to grow online sales, working with partners in key markets and in time to offset the costs of Brexit.

The priority is to fund investment in the transformation and to rebuild balance sheet metrics towards levels consistent with investment grade. Our approach will prioritise building omni-channel capability, including investment in the supply chain and maintenance of the changing estate, with an expectation of capital investment recovering to pre-Covid levels. As above we are seeking to fund the costs of rotation of the store estate with the realisation of funds from our asset management programme.
For further information, please contact: Investor Relations:
As we recover balance sheet metrics consistent with investment grade, we will assess the reintroduction of dividend payments, although as we focus on restoring profitability this is unlikely in the current year.

Fraser Ramzan: +44 (0)20 3884 7080
Media enquiries:
Jack Cook: +44 (0)20 3882 5535
Investor & Analyst presentation and Q&A:
Corporate Press Office: +44 (0)20 8718 1919

A pre-recorded investor and analyst presentation will be available on the Marks and Spencer Group plc website from 7:30am on 26 May 2021.

Steve Rowe and Eoin Tonge will host a Q&A session at 9.30am on 26 May 2021:

Registration link here
Fixed Income Investor Conference Call:
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Room Number: 095533
Pin: 2990

This will be hosted by Eoin Tonge, Chief Finance Officer, at 2pm on 26 May 2021:

Registration link here

Dial in number: +44 33 0606 1118
Room Number: 753824
Pin: 7026

International Access Numbers

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ITFS: International Access Numbers

A recording of this call will be available until 5pm on 2nd June 2021:
FULL YEAR FINANCIAL REVIEW Financial Summary Notes:
Dial in number: +44 33 0606 1118
Access code: 905044

2020/21 is a 53-week year. The comparative period is 52 weeks to 28 March 2020. To aid understanding, we are showing the unaudited 52 weeks to 27 March 2021 with commentary and percentage changes on a 52-week basis unless otherwise stated.

Due to a change in the Group's accounting policy to recognise BACS payments at the settlement date, rather than when they are initiated, the comparative amounts for net debt and free cashflow have been restated.
Group results
There are a number of non-GAAP measures and alternative profit measures ("APMs"), discussed within this announcement and a glossary and reconciliation to statutory measures is provided at the end of this report. Adjusted results are consistent with how business performance is measured internally and presented to aid comparability of performance. Refer to the adjusting items table below for further details.

Group revenue before adjusting items was £9,166.9m on a 53-week basis. On a 52-week basis, it decreased 11.9%, with UK revenue down 11.3% driven by Clothing & Home revenue declining 31.5%, and International revenue down 17.5%. The Group generated an adjusted profit before tax of £50.3m and a statutory loss before tax of £(209.4)m on a 53-week basis (or £41.6m and £(201.2)m respectively on a 52-week basis).

Statutory loss before tax includes total charges for adjusting items of £259.7m on a 53-week basis, including charges of £133.7m related to organisational change, £95.3m in relation to store closures identified as part of transformation plans, £79.9m for intangible asset impairments, offset by a £90.8m gain largely relating to the release of a portion of the Covid inventory provision made in the prior year.
UK: Food
For full details on adjusting items and the Group's related policy see notes 1 and 3 to the financial information.

UK Food revenue decreased 0.6%. Like for like (LFL) revenue grew in the first three quarters but declined in the fourth quarter as the UK-wide lockdown forced the hospitality business and parts of our franchise business to close again. M&S Food reported sales do not benefit from a direct online grocery presence, with these sales instead reported through Ocado Retail.

Excluding franchise and hospitality, core M&S Food categories performed strongly, particularly over key events, with LFL revenue growth of 6.9% for the year.

Operating profit before adjusting items decreased 9.8%, largely due to an adverse mix impact on gross margin, which was only partially offset by reduced costs which benefitted from government support.

Gross profit decreased £60.7m or c.84bps primarily as a result of hospitality closures and lower convenience sales, partly offset by strong growth in core categories and cost saving programmes, including initial synergies of £21.4m from Ocado supply.

Store staffing costs declined £30.8m, primarily driven by £45.5m of efficiencies enabled by technology improvements in store. We incurred Direct Covid costs within store staffing relating to incentives for retail colleagues of £20.8m and door host costs of £33.7m. Store staffing costs include government furlough support of £28.8m.

The movement in other store costs largely relates to government business rates relief of £70.8m, partly offset by additional Covid-related cleaning and hygiene costs.

Distribution and warehousing reflects the increased costs as a result of online orders, as well as Brexit-related costs of £9.0m and Covid-related hygiene and social distancing measures. The Food business incurred total costs relating to Brexit of £9.9m in the year; a detailed breakdown is given in the Brexit section below.

Ocado Retail Limited
The table below sets out the drivers of the movement in operating profit before adjusting items. To improve understanding we provide additional information on Covid-related impacts with adjusted profit. Some direct Covid costs and government support are visible within the right-hand table as they were incremental to 2019/20, whereas other costs, for example the ongoing costs of furloughed colleagues (£41.9m), were also costs in 2019/20 and so are not visible. The full costs and government support for furlough income and business rates are detailed in a separate section.
Group share of consolidated results of Ocado Retail Ltd Ocado Retail Ltd is reported as an associate of M&S as certain rights are conferred on Ocado Group plc for an initial period of at least five years from acquisition. Exceptional items are defined within the Ocado Group plc Annual Report and Accounts 2020. A prior year comparative is not provided here as the investment in Ocado Retail Ltd was made part-way through 2019/20.
The Group holds a 50% interest in Ocado Retail Ltd ("Ocado Retail"). The remaining 50% interest is held by Ocado Group plc ("Ocado Group"). Full year results are consistent with the quarterly results reported by Ocado Group on behalf of Ocado Retail for the quarterly periods ended 31 May 2020, 30 August 2020, 29 November 2020 and 28 February 2021.

Revenue grew 43.7% on an annual basis due to strong demand for online grocery, higher than normal basket size and a smoothed trading profile across the week. Following switchover on 1 September, M&S products have accounted for over 25% of the average Ocado basket.

Ocado Retail EBITDA before exceptional items was £189.9m, driven by the strong revenue growth and cost performance reflecting a period of sustained high demand. Units per hour throughput increased in customer fulfilment centres, with operational improvements across the network. Trunking and delivery costs reduced as a percentage of sales due to fewer deliveries per van, as a result of a higher number of items per basket.

In addition, Ocado Retail has recognised £50.5m of exceptional income before tax, largely related to insurance receipts for business interruption for the period up to 28 February 2021 arising from the Andover fire in 2019.
UK: Clothing & Home
As a result of strong EBITDA growth and insurance receipts, Group share of Ocado Retail profit after tax was £78.4m. After a charge of £14.2m in adjusting items relating to the amortisation of the intangible asset created by the investment, Ocado Retail contributed £64.2m to Group profit after tax.

Clothing & Home revenue decreased 31.5% as a result of the impact on store sales of lockdowns and restrictions throughout the year. Performance improved following store reopening in quarter two and either side of the national lockdown in quarter three, and the online business built momentum through the year.
Online
To enable greater insight into these movements, we are providing further detail on the performance of each channel.
Stores
UK Clothing & Home online revenue increased 53.9%. Following initial disruption in April, online sales remained strong and built momentum, with quarter four revenue up 105.8%. Online customer traffic increased 35.2% driven by both direct and paid search helping to drive 52.5% growth in active customers to 9.0m. Growth was led by mobile, with over 3.5m downloads of the M&S app driven by the relaunch of Sparks. This led to increased app usage, with 2.3m monthly active users (2019/20: 1.2m), which also helped to drive better conversion. In addition, there was a benefit from a c.9 percentage point reduction in returns rates compared with last year due to changes in customer behaviour and product mix during lockdown. This offset headwinds from lower in-store orders, which are attributed to the online channel, as well as a small decline in average order value as customers' purchases focused on core product.
Total Clothing & Home
UK Clothing & Home store revenue decreased 56.2%: the impact of national lockdowns, local restrictions and the shape of the store estate adversely impacted the business with footfall down 67.8% and overall transactions down 52.4%. Basket value fell 5.3% in stores in line with online as customers' purchases focused on core product.

The Clothing & Home business in total generated an underlying operating loss before adjusting items for the year of £129.4m compared with a profit of £223.9m in the prior year. While online growth resulted in a substantial improvement in online operating profit, this was more than offset by the decline in stores, with lower costs insufficient to offset reduced overall sales.

Gross profit decreased £611.7m or (218)bps. Adverse currency movements and under-recovery of fixed logistics costs within margin impacted by (78)bps. Discounting increased (140)bps driven by an increased mix of clearance sales made at a higher depth of cut than last year.

Store staffing costs declined £147.6m, partly driven by £42.6m of efficiencies enabled by technology improvements in store. Store staffing costs include government furlough support of £88.6m.

The movement in other store costs largely relates to business rates relief of £101.4m.

Distribution and warehousing reflects the higher costs to serve online demand, both from the Castle Donington warehouse and shipments from store partially offset by volume savings from reduced deliveries to store. The overall increase in distribution and warehousing costs was offset by delivery income within revenue.

The decline in central costs was largely driven by lower marketing activity, lower headcount and a reduction in depreciation of technology assets as we move to cloud-based solutions and assets reach the end of their useful lives.

The table below sets out the drivers of the movement in Clothing & Home operating (loss)/profit before adjusting items. To improve understanding, we provide additional information on Covid-related impacts within adjusted profit. Some direct Covid costs and government support are visible within the right-hand table as they were incremental to 2019/20, whereas other costs, for example the ongoing costs of furloughed colleagues (£129.1m), were also costs in 2019/20 and so are not visible. The full costs and details of government support for furlough income and business rates are detailed in a separate section.
International
Clothing & Home online generated an operating profit margin of c.14%, with higher volumes leading to increased leverage of the online fixed cost base. Profitability also benefited from a reduced returns rate, although this was partially offset by the adverse impact of lower in-store orders. Conversely, the operating loss in stores represented a margin on sales of c.(26)%.

International revenue decreased 17.3% at constant currency ("CC") as stores were adversely impacted by rolling Covid lockdowns and restrictions. Online sales remained strong throughout, particularly in markets in which the Group has a store presence and through partner websites, with sales growth of 114.3% to £165.7m.

The decline in Clothing & Home sales was driven by lower store sales in the Republic of Ireland and India, and lower franchise shipments particularly to Asia, partly offset by online growth. Food sales were more resilient particularly in the Middle East and Asia, as Covid disruption shifted habits to favour eating in. This helped offset the steep decline in travel franchise sales in Europe and Brexit related disruption in quarter four.

Operating profit before adjusting items was down 59.3% driven by the lower Clothing & Home sales and incremental costs relating to Brexit. A detailed breakdown of this is given in the Brexit section later in this report.
M&S Bank & Services
Gross profit decreased £87.9m as lower store sales were only partially mitigated by strong online growth. Store staffing and other store costs declined. The costs of £10.8m relating to salary costs of colleagues on furlough were partially offset by government furlough support of £6.3m and reduced overtime hours, while the Group benefited from a further £6.8m of government support for rent and rates across owned markets, and £7.1m of rent relief. The increase in distribution costs largely relates to the growth of online sales and costs incurred as a result of Brexit of £6.2m which was only partly offset by lower distribution costs on shipments to stores. Central cost reductions were enabled by the shift to digital events from buying fairs and reduced travel.
Covid costs
M&S Bank & Services income before adjusting items was down £14.8m to £2.0m. This was the result of a significant decrease in income from credit card and travel money sales. M&S Bank and services income after adjusting items relating to PPI decreased £4.6m to £(0.4)m.

In the following table we set out identifiable costs within adjusted profit related to Covid. We incurred a number of Direct Covid costs such as door hosts and hygiene of £63.2m, incentives for working through the pandemic for non-furloughed colleagues of £28.5m and there was a slight reduction in colleague holiday hours of £3.9m.

In addition, business rates relief of £174.6m partly compensated for the substantial loss of trade from closed space in Clothing & Home and hospitality areas and franchise stores in Food.
Brexit
Finally, identifiable costs include government grants for furlough income of £131.5m, which were more than offset by the salary costs incurred for furloughed colleagues of £181.8m.

The following estimated cost impacts were incurred by the Group in 2020/21 as a result of Brexit.

Administrative costs include additional supply chain costs at the Motherwell and Faversham depots as well as costs of a digital track and trace platform, additional variable cost per tray, veterinary certification costs and the one-off costs of change. Tariffs relate to duty on exports of Clothing & Home and elements of the Food catalogue into the EU.
Net finance cost
In addition, the Group saw adverse trade impacts including the restriction of trade on certain products, port delays and increased operational complexity reducing availability.
Group profit before tax & adjusting items
Net finance costs decreased £19.5m to £168.1m. This was primarily due to higher pension income due to the increased IAS19 pension surplus at last year end. In addition, there was a decrease in the interest payable on lease liabilities offset by lower interest received on deposits and higher interest payable on debt due to a credit rating downgrade and the premium paid as part of the buyback of bonds.
Group loss before tax
Group profit before tax and adjusting items was £50.3m on a 53-week basis, down £352.8m on last year. The profit decrease was driven by the decline in Clothing & Home and International operating profits.
Adjusting items
Group loss before tax was £(209.4)m on a 53-week basis, down £276.6m on last year. This includes adjusting items of £259.7m on a 53 week basis (last year £335.9m).

The Group makes certain adjustments to statutory profit measures in order to derive alternative performance measures (APMs) that provide stakeholders with additional helpful information and to aid comparability of the performance of the business. For further detail on these charges/gains and the Group's policy for adjusting items, please see notes 1 and 3 to the financial information.

On a 53-week basis, adjusting items charges were £259.7m, with £16.9m incurred in week 53, largely related to restructuring costs.

A charge of £133.7m has been incurred in relation to organisational change. This includes the integration of more flexible management structures into store operations, as well as the streamlining of store and management levels as part of the Never the Same Again programme. This has resulted in a reduction of c.8,200 roles across support centres, regional management, and UK stores, with associated redundancy costs of £99.7m. We expect this restructuring to generate annualised cost savings of at least £115m.

A charge of £95.3m has been recognised in relation to store closures identified as part of transformation plans reflecting an updated view of latest closure costs as a result of an increase in the number of stores in the programme. Further material charges relating to the closure and reconfiguration of the UK store estate are anticipated as the programme progresses with total future charges of up to c.£268m estimated over the next 10 years, bringing anticipated total programme costs since 2016 to be up to c.£926m.

A gain of £90.8m has been recognised as being directly attributable to the Covid pandemic relating to the release of a portion of the inventory provision made in the prior year compared to initial estimates offset by further costs relating to cancellations and storage. The sell-through of Clothing & Home stock has been much stronger than anticipated.

A charge of £79.9m has been recognised in relation to impairment of intangible assets, comprising £39.6m for the impairment of Per Una goodwill, and the balance for replaced, retired or decommissioned computer software assets.

Charges of £16.6m have been incurred in relation to the one-off transition costs associated with the closure of the old Sparks loyalty scheme following the launch of the new programme in July 2020.

A charge of £14.2m has been recognised relating to the amortisation of intangible assets acquired on the purchase of our share in Ocado Retail.

A gain of £6.9m was recognised relating to the reversal of previously recognised store impairments offset by newly impaired stores. The Group has revised future projections for UK stores (excluding those stores which have been captured as part of the UK store estate programme) for the current view of pressures impacting the retail industry, which is less negative overall than previously projected.
Taxation
Charges of £2.4m have been incurred relating to M&S Bank, primarily due to the insurance mis-selling provision. The Group's share of the total insurance mis-selling and forward economic guidance (FEG) provisions of £338.3m exceeds the total offset against profit share of £225.1m to date and this deficit will be deducted from the Group's share of future profits from M&S Bank.
Loss/Earnings per share
The effective tax rate on profit before adjusting items was 56.5% (50.3% on a 53-week basis; 2019/20: 20.7%). The effective tax rate on statutory loss before tax was a credit of 3.4% (credit of 3.9% on a 53-week basis; 2019/20: charge of 59.3%) due to the Group statutory loss offset by the impact of disallowable adjusting items. Given the lower level of profits, the effect of the recapture of previous tax relief under the Marks and Spencer Scottish Limited Partnership ("SLP") structure has increased compared with previous years. Next year, we anticipate an effective tax rate on profit before adjusting items of c.26% partly due to the continuation of the recapture of previous tax relief.

Basic loss per share was 9.8p (last year earnings of 1.3p), due to the decrease in profit year on year and the increase in weighted average shares outstanding. The weighted average number of shares in issue during the period was 1,953.5m (2019/20: 1,894.9m). Basic loss per share on a 53-week basis was 10.1p.
Capital expenditure
Adjusted basic earnings per share was 1.1p (last year earnings of 16.7p) due to lower adjusted profit year on year. Adjusted basic earnings per share on a 53-week basis was 1.4p.

Group capital expenditure before disposals decreased £182.7m to £146.6m as a result of careful management of discretionary spending as a result of the pandemic.

UK store remodelling costs related to Food renewal stores and the repurposing of space from Clothing & Home and cafes to Food. Spend on New UK stores related to seven Simply Foods and three full-line store openings in the year.

Supply chain expenditure reflects investment in food equipment and fleet to support anticipated volume growth, investment in a second ambient food national distribution centre in Milton Keynes and spend on improvements to Castle Donington capabilities and our Bradford warehouse to support online expansion.

IT & M&S.com spend includes costs related to the licence for the Food ordering and allocation system and investment in digital capability for example, to support integration of more flexible management structures into store operations.
Cash flow 2019/20 net debt and free cash flow figures have been restated. Due to a change in the Group's accounting policy to recognise BACS payments at the settlement date, rather than when they are initiated, to more appropriately reflect the nature of these transactions, the comparative amounts have been restated.
Property asset replacement decreased £83.2m due to the prior year asset replacement programme in stores, although this will normalise towards pre-pandemic levels going forwards.

The business generated free cash flow of £296.4m, largely driven by working capital inflow, reduced capital expenditure and lower tax payments, which more than offset the lower adjusted operating profit.

The working capital inflow since year end 2019/20 was driven by higher payables in Clothing & Home and Food (c.£125m) largely due to the extension of payment terms for C&H suppliers and the timing of payments including to landlords. Lower stock was a result of strong Easter trading and the higher stock at prior year end resulting from lockdown. Franchise receivables reduced due to travel store closures.

Lower capital expenditure largely reflects the reduction of discretionary spending as a result of the pandemic. Cash capital expenditure includes £77.2m relating to prior year capital accruals.

The decrease in financial interest and tax payments to £81.8m is due to the reduction in UK corporation tax paid reflecting the full year taxable loss position.

Defined benefit scheme pension funding of £37.1m reflects the second limited partnership interest distribution to the pension scheme.
Net debt
Adjusting items cash outflow was £120.5m. This included £92.1m relating to the costs of organisational change, £10.9m in relation to the store rotation programme, £6.2m paid for deep storage and fabric during the Covid pandemic, £5.6m in relation to the transition to the new Sparks loyalty programme, £2.4m for M&S Bank, and £1.7m relating to costs associated with the launch of M&S product on the Ocado Retail platform.

Net debt excluding lease liabilities decreased £278.6m from the start of the year.

There was a further reduction in the value of discounted lease obligations outstanding. New lease commitments and remeasurements in the period largely relating to 11 properties were £48.3m of which 10 opened in the year. This was more than offset by £184.3m of lease repayments.
2019/20 net debt and free cash flow figures have been restated. Due to a change in the Group's accounting policy to recognise BACS payments at the settlement date, rather than when they are initiated, to more appropriately reflect the nature of these transactions, the comparative amounts have been restated.
The composition of Group net debt is as follows:
Liquidity
Of the outstanding discounted lease commitment at period end, approximately 40% related to full-line stores and 30% to Simply Food stores, with 8% relating to International leases and the balance largely relating to warehousing and offices.

At year end, the Group held cash balances of £674.4m (2019/20: £254.2m), with undrawn facilities of £1.1bn expiring April 2023. This strong liquidity position is as a result of free cashflow performance and a £300m bond issuance in November, which was used to refinance the bond maturity due in December 2021.
Dividend
The refinancing of the Group's December 2021 maturity, along with the successful negotiations in March 2021 to extend the relaxation of covenant measures on the revolving credit facility up to and including March 2022, mean that the Group has liquidity headroom of over £1.5bn.
Pension
We did not pay a final dividend for 2019/20 and the Board has previously announced the decision not to pay a dividend for the 2020/21 financial year.

At 3 April 2021, the IAS 19 net retirement benefit surplus was £631.4m (2019/20: £1,902.6m). The surplus at last year end had increased significantly due to unusually high credit spreads as a result of Covid. During the year, credit spreads have reverted to more normalised levels giving rise to the decrease in the surplus.

The Trustee of the UK Defined Benefit Scheme has commenced a triennial actuarial valuation of the Scheme at 31 March 2021 as required by statute. The assumptions used are to be agreed between the Trustee and the Company. The Scheme surplus on a statutory basis was £652m at the last actuarial valuation in 2018.
Statement of financial position
In September 2020, the Scheme purchased additional pensioner buy-in policies with insurers for approximately £750m. Together with the policies purchased in April 2019 and March 2018, the Scheme has now, in total, insured around 80% of the pensioner cash flow liabilities for pensions in payment. The buy-in policies cover specific pensioner liabilities and pass all risks to an insurer in exchange for a fixed premium payment, thus reducing the Group's exposure to changes in longevity, interest rates, inflation and other factors.
Important Notice: Statements made in this announcement that look forward in time or that express management's beliefs, expectations or estimates regarding future occurrences and prospects are "forward-looking statements" within the meaning of the United States federal securities laws. These forward-looking statements reflect Marks & Spencer's current expectations concerning future events and actual results may differ materially from current expectations or historical results. Any forward-looking statements are subject to various risks and uncertainties, including, but not limited to, failure by Marks & Spencer to predict accurately customer preferences; decline in the demand for products offered by Marks & Spencer; competitive influences; changes in levels of store traffic or consumer spending habits; effectiveness of Marks & Spencer's brand awareness and marketing programmes; general economic conditions The forward-looking statements contained in this document speak only as of the date of this announcement, and Marks & Spencer does not undertake to update any forward-looking statement to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. including, but not limited to, those related to the Covid-19 pandemic Download Press Release PDF or a downturn in the retail or financial services industries; acts of war or terrorism worldwide; work stoppages, slowdowns or strikes; and changes in financial and equity markets. For further information reg arding risks to Marks & Spencer's business, please consult the risk management section of the 2021 Annual Report.
Net assets were £2,285.8m at the year end, a decrease of 38% since the start of the year largely due to the decrease in the net retirement benefit surplus and the Group loss for the year.

- Ends -

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MARKS AND SPENCER GROUP PLC FULL YEAR RESULTS FOR 53 WEEKS ENDED 3 APRIL 2021

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2020/21 is a 53-week year. The comparative period is 52 weeks to 28 March 2020. To aid understanding, we are showing the unaudited 52 weeks to 27 March 2021 with commentary and percentage changes on a 52-week basis unless otherwise stated.

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While returns rates to stores are around 8%, this jumps to around 25% for items bought online.

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Ecommerce Returns: 2020 Stats and Trends - SaleCycle

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Key stats on ecommerce returns, from reasons shoppers return online purchases, to most returned product categories.

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Ecommerce Returns: 2020 Stats and Trends

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Returns can cost you 10% of your business

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Returns can cost you 10% of your business

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As a retailer, the likelihood is you're still handling the aftermath of January's sale returns. You're counting the cost and looking at ways to minimise the impact of returns on your P&L for the year ahead.

Product returns cost UK retailers around £60bn a year and can account for up to 10% of your business.

As you continue to fight for customer loyalty within a competitive landscape, returning items, be it in store or online, has never been easier. It's a necessary evil which has become a key part of your overall customer experience.

So how do you stem the tide, start minimising returns to maximise profits and get ahead of your competitors?

Yocuda created the world's leading eReceipt product to help you identify and understand your customers, engage with them and drive loyalty.

We've enabled some of the biggest names in UK retail to become customer centric, giving them far greater control of their returns approach.

"We're receiving ever increasing enquiries from retailers about getting their returns under control."
Andrew Carroll, CEO of Yocuda

Here's what you need to know...

Our Rules of Return

The key to reducing returns is finding a solution that proves beneficial to your customers.

Keep it sold

As soon as a product or service is purchased, your focus needs to switch to customer aftercare.

Ensuring a product stays sold is an arch challenge shared by all retailers. A study by Accenture showed that only 5% of returned electronic products are defective, yet many customers return working items believing they're broken. That's because consumers only spend an average of 20 minutes trying to get a device to work before giving up because it's 'faulty'.

Ongoing interaction and engagement with the customer is key.

Traditionally an Achilles heel for store retailers, whose last customer touchpoint came at point of purchase, the use of eReceipts has been a game changer.

During Black Friday Weekend in 2016, Yocuda issued just over 760,000 emailed receipts (36% increase from 2015) and 1,835,000 emailed receipts in the last shopping week before Christmas 2016.

Many of Yocuda's clients see open rates of their eReceipts at upwards of 75% - in the one week before Christmas alone, those businesses benefited from 675,000 additional customer interactions.

This level of customer engagement has been the lynchpin to improving Argos' customer aftercare and returns strategy.

Argos fully utilises the eReceipts experience to signpost the aftercare that the company offers, namely a bespoke customer support website containing instructional content including install and product set up information, to reduce the likelihood of an item being returned.

eReceipts are crucial to driving customers over to this dedicated support site to protect the sale.

"The numbers are compelling. In the month of December, recipients of Argos eReceipts clicked on links 40,428 times, on 30,130 eReceipts. Those eReceipts had a total basket value over £3.7m."
Ian Fenton - Customer Returns Prevention Manager, Argos

Own the return

If a customer is still intent on returning or exchanging a product, an eReceipt opens up a new, frustration-free channel for customers to easily navigate the process.

For example, within eReceipts retailers can embed direct links to stock availability and product reserve function for their nearest store, ensuring that a customer heading out to exchange, or potentially seek a refund, will not be disappointed.

Returns are a thorn in the side of operations, both logistically and in cost. eReceipts are now giving retailers an instant overview of returned stock, information which is then used to strategically replenish stock in the required stores or for online orders.

Use your data wisely

Wouldn't it be amazing if you could send useful information to a customer that's perfectly timed to coincide with when they might hit an 'issue' with their purchase?

You can. eReceipts builds data and intelligence to allow retailers to understand not only the purchasing trends and potential issues of any given product but also a customer's behavioural patterns - their propensity to return a product and when they're likely to consider it.

A vacuum cleaner that stops working and appears broken, but simply requires a change of filter after 3 months' use, no longer needs to enter the costly product returns journey.

Only accept true returns

Return and delivery fraud costs retailers hundreds of millions of pounds every year.

In 2015, fraud losses on face-to-face purchases on the UK high street increased by 8% to £53.5 million.

For bricks and mortar retailers the impact is seismic.

With eReceipts, we're levelling the playing field with traceability. You can now prove if a product has been purchased and, if so, where it was bought, when it was bought and for how much.

Retailers using eReceipts hold all the data necessary to question the legitimacy of a return.

As an area which can account for 10% of your business and with six in ten retailers suggesting returns are having a negative impact on their business, its little surprise returns have been brought into sharp focus.

"Yocuda is addressing an area which is a growing pain point for many retailers, providing
multiple options as solutions."
Andrew Carroll, CEO of Yocuda

Make the margin you're losing to returns decrease.

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Yocuda :: Product returns cost UK retailers around £60bn a year and can account for up to 10% of your business.

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As a retailer, the likelihood is you're still handling the aftermath of January's sale returns. You're counting the cost and looking at ways to minimise the impact of returns on your P&L for the year ahead. Product returns cost UK retailers around £60bn a year and can account for up to 10% of your business.

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Ecommerce returns can be a disease-aggressively attacking profit margins, gutting conversion rates, and ultimately threatening your business.

Collectively, consumers returned products worth $428 billion in 2020-just over 10% of total retail sales. The National Retail Federation estimates the cost of returns amounts to $101 billion.

It paints a bleak portrait, especially for online retailers. But the real cost driver is this: many customers buy with an explicit plan to immediately return some or all of their items.

In response, businesses are adding workers, increasing warehouse space, and establishing separate departments to handle reverse logistics. Returns are the new normal and central to customer experience. But they don't have to be a plague.

In fact, how you deal with ecommerce store returns-before and after purchase-can differentiate your brand, create a competitive advantage, and even make you more profitable.

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Table of Contents:

1. The state of ecommerce returns in 2021

2. Strategies for handling ecommerce returns

3. The best software for handling ecommerce returns

4. Ecommerce returns best practices

The state of ecommerce returns in 2021

Ecommerce return rates by industry

Ecommerce returns happen across all industries. In fact, a quarter of all consumers return between 5% and 15% of the items they buy online. (That supports why more than a quarter of retailers have seen a rise in the number of online-purchased items being returned by a customer.)

Automotive retailers struggle the most, with customers in those industries returning more than almost 1 in 5 purchases. That's shortly followed by apparel retailers (12.2%) and home improvement and houseware brands, whose customers return 11.5% of online orders.

We also see differences between the number of returns and the payment method a customer used. Shoppers that purchase an item using a credit card were most likely to return an online purchase. Those buying with a debit card were the least likely.

Why do people return items?

Data suggests that 20% of online-bought products are returned, compared to just 9% of items bought in a brick-and-mortar store. Let's take a closer look at why that figure is so high.

Consumer preference-based returns (e.g., size, fit, style, etc.) tend to drive around 72% of all returns in fashion product categories. Non-preference-based reasons (e.g., defective) and "not as described" account for 10% in total.

1. Size too small: 30%

2. Size too large: 22%

3. Changed my mind: 12%

4. Style: 8%

5. Not as described: 5%

6. Defective: 5%

7. Other or not specified: 18%

When customers know that they can get their money back just as easily as they can spend it, they'll shop with more confidence and spend more."

- Sanaz Hajizadeh, Happy Returns

Ecommerce returns and the holiday season

Unsurprisingly, the number of returns mirrors peak ecommerce sales periods. The holiday season, for example, is the most popular time of year for online shopping.

A quarter of holiday shoppers buy items with the intention of returning them at a later date. Whether it's gifts a friend doesn't like or trying to reclaim some money they spent in a holiday-inspired splurge, it's why ecommerce brands receive the most returns throughout December, January, and February.

The COVID impact on ecommerce returns

Shipping courier DHL saw a 20% decrease in average weekly return volumes during the start of the pandemic. It reports that "drop is likely attributed to consumers wanting to avoid extra stress during the pandemic; to return a product, they must leave the house to visit the local shipping store, a risk many are reluctant to take during lockdown, especially when advised to self-isolate."

Interestingly, we see similar ecommerce trends in the time it takes for brands to process a return. Pre-COVID, it took retailers 4.53 days to register a return. Now, that's bumped up to 8.17 days.

The impact of returns on customer loyalty

When people do decide to return their online purchases, most retailers opt to refund the purchase price to a customer post-return. Some 18% offer exchanges; the same amount give a gift card to redeem on a future purchase.

Regardless of which refund type a retailer is offering, there are strong customer expectations to compete with. Some 62% of customers expect an exchange or refund within 30 days of purchase.

But put a foot wrong in this return experience and you'll add a hurdle in your mission toward getting repeat customers. Data from Rebound shows a quarter of shoppers think a delay in processing their return contributes toward a negative experience.

Get the returns experience right and 92% of customers will return to buy again. You'll make future purchase decisions easier and increase customer lifetime value.

Strategies for handling ecommerce returns

Post the item back to your warehouse

This is the most popular returns process for ecommerce-only brands without a brick-and-mortar store. When a customer wants to return an item they've bought online, they post it back to your warehouse or fulfillment center. From there, the merchandising department inspects the product and confirms it's eligible for a refund.

Retailers can save time on manual returns with return management apps. They'll speed up the process, give customers a status of their return, and update your inventory management system automatically (more on that later).

Return items to store

Research shows that 62% of shoppers are more likely to shop online if they can return their purchase to a physical store. If you have one, consider allowing ecommerce customers to visit the store to return their item. The returned goods can then be inspected and put back on the shelf for future customers.

Not only are store returns more convenient, but enticing customers to enter a store could prevent future returns. If a customer is returning a t-shirt that doesn't fit, for example, they'll have the opportunity to try on other sizes during their visit. That gives them more confidence in future purchase decisions-both online and offline-because they know their size.

Outsource reverse logistics

Returns management is a lengthy process. But it's one you don't have to handle in-house. Third-party logistics (3PL) partners handle the entire order fulfillment process-including returns. A provider offering reverse logistics stores a retailer's inventory in a third-party warehouse.

When customers return an item the 3PL has previously shipped, it arrives back at their warehouse. Their team inspects the item and processes a refund. The approved returned item is then put back on the shelf to be picked for another order.

Watch: 3 Signs You Need a 3PL

Best software for handling ecommerce returns

Brands can handle ecommerce returns by using one of the many returns and exchanges apps available in the Shopify App Store. These apps track and fulfill orders, get your products out the door, and protect your business from risky transactions.

When the customer experience team is spending the majority of their time manually creating shipping labels and answering questions like "Where is my refund?" instead of helping the shoppers find the right item to purchase, it's a clear indication that it's time to automate returns."

-Sanaz Hajizadeh, Happy Returns

Across all Shopify businesses, 65% of refunds are performed manually; the remaining 35% via apps. Here are three of the most popular.

Happy Returns

Happy Returns is an ecommerce returns management software used by retailers like Rothy's, Everlane, and Andie.

Sanaz Hajizadeh, Happy Returns' Director of Product Management, explains, "Happy Returns offers box-free returns for online merchants through a combination of software and reverse logistics-pioneering in-person, aggregated returns that can help dramatically reduce shipping costs and the impact on the planet."

"Happy Returns covers all aspects of post-purchase: from tracking orders as they are fulfilled to providing flexible return options for merchants, no matter where their warehouse and shoppers are located."

In addition to its returns software, Happy Returns also provides buy online, return to store and mail returns services for hundreds of leading merchants. It maintains a network of over 2,600 Return Bar locations where online shoppers can drop off their returns in person.

"Every merchant should focus on selling and increasing revenue. By using tools that automate the post-purchase process, they can reduce operational headaches. Of course, merchants can use one tool for each task, but combining them in one powerful tool makes it easier to gather data, manage their return policy, and keep everything seamless and on-brand."

Loop

Loop is another returns management tool for Shopify Plus sites. Customers submitting a return are incentivized to exchange the item, rather than return it. They can exchange an item for another size or color in one click.

Should a customer still want a refund for their purchase, Loop helps retailers streamline their returns process. It uses data from a returns form and your returns policy to automatically approve or deny requests.

"We like Loop because it is incredibly user friendly, so it's super easy for customers to return items. We like this because it makes us look good and lets the customer leave with a positive experience. Because of the way that it's set up, it makes it easy to swap out returns for other products in our shop, which helps keep the customer and the money." -Lanai Moliterno of Sozy.

Returnly

If you're managing ecommerce returns from international customers, Returnly is a good option. It automatically creates return labels to get packages through customs. Shoppers can also request refunds (or credit) in their local currency.

Not only that, its Green Returns program helps retailers reduce waste. It makes real-time decisions based on a retailer's returns policy to judge whether an item can be resold if returned. If it can't, the customer doesn't need to waste their time shipping it back. Fewer shipments mean less waste, cheaper shipping costs, and better customer experiences.

Ecommerce returns best practices

Now we know the process for handling ecommerce returns and the options available to you, there are still things you can do to reduce the number of returns you're handling. (That's the end goal, after all. Fewer returns means happier customers and more revenue.)

Here are six ecommerce returns best practices to boost efficiency and cut costs.

Make product information accurate and easy to find

It's standard practice to check that all public-facing content-including product descriptions-are accurate and detailed. If the product arrives differently than expected, there's a high chance of it being returned.

To reduce returns and improve conversions, make sure the following information is included on every product page across your ecommerce site:

Product weight and dimensions

Materials used to make the product

Size guides, including the size a model is wearing (if appropriate)

Your ecommerce returns policy (i.e., how long they have to return an item, any costs associated with it, and the types of product eligible for return)

Rothy's highlights its returns policy on each product page to increase conversions and prevent returns.
Take Supplement Warehouse, for example. It ships 300 supplement packages daily through its warehouse, all of which are ordered through its ecommerce store. Its marketing manager, Brian Anderson, explains that most people return their items because customers didn't notice that their product contained a specific ingredient.

"Because we sell vitamins and supplements, many people order the product and wait until they have it in hand to review all of the ingredients. Some are allergic or their doctor told them not to take it, so they end up returning it. We have made sure that all product labels are large and visible on product pages. This makes it easier for potential customers to read the label before they purchase." -Brian Anderson, Marketing Manager at Supplement Warehouse

Automation helps solve most of these issues. Use plug-ins like Low Stock Alert to see when items are running low. It prevents you from selling an item that isn't available-and shipping the wrong item in its place.

According to Josh Wayne, VP of Commerce Products at TrueCommerce, "A lot of brands try to manage all their product information manually, and with ecommerce channels growing so rapidly, it's just not feasible to avoid mistakes that way."

"What ends up happening is, a customer orders a product, and when it arrives, it's the wrong color or size or compatibility, because there was incorrect or missing information online. It's an immediate return, and can also result in low ratings and reviews, which impact future sales." -Josh Wayne, VP of Commerce Products at TrueCommerce

Use 3D/AR on your ecommerce website

Shopping in-store naturally has some advantages over shopping online. Amongst the biggest is the ability to see, try on, and interact with products before a customer decides to buy it.

Augmented reality (AR) technology helps online shoppers experience the same thing. Retailers can use it to show what their products look like tried on, in a customer's home, or next to an item they own for a size comparison.

Each of those things prevent the reason behind 22% of returns: the fact the item looks different in-person than it did online.

Gunner Kennels, for example, uses augmented reality and 3D technology on its ecommerce store. It knew it'd be difficult for customers to see the size of a dog crate and whether their pet would fit inside it-which would inevitably lead to returns.

With the help of Shopify Plus, Gunner Kennels developed 3D models of its crates.

With this technology, buyers can now use their device to place the crate right next to their dogs to confirm sizing, decreasing our return rate by 5%. We would like to use this feature on future products and other accessories moving forward."

-Macey Benton, VP of Marketing, Gunner Kennels

The retailers' investment in 3D and AR technology paid dividends:

Return rate reduced by 5%

Cart conversion rate increased by 3%

Order conversion rate increased by 40%

Learn more: Augmented Reality in Ecommerce: How AR, VR and 3D Are Changing Online Shopping

Pack and ship items securely

It's easy to think that once an item has left your warehouse, it's off your plate. The truth is, some 30% of items are returned because they arrived faulty or damaged. But you wouldn't ship them in that state. Something went wrong in transit.

Granted, your delivery carrier plays a big role in this. But there are steps you can take to minimize the chances of an item becoming broken or faulty through shipping-and therefore, being returned:

Inspect every item of clothing before it's dispatched to a customer

Use protective material, such as bubble wrap, in a delicate package

Add Fragile labels to parcels with easily breakable items inside (like glass)

Use the correct parcel size so items don't jolt around in transit

Make your returns process sustainable

Data shows that three-quarters of customers intend to shop more with retailers that are making their returns process more sustainable. Another 71% would be willing to pay more to return with a sustainable option.

But most companies' existing returns policy doesn't fit that bill. It's estimated that return shipping in the US alone creates 15 million tonnes of carbon emissions per year. That's the same amount produced by five million people.

Preventing the likelihood of returns help to reduce your ecommerce brand's carbon footprint. The fewer packages that come your way, the less fuel and resources you use.

Unfortunately, you'll still deal with returns. Make sure your ecommerce return policy is more sustainable by ditching the prepackaged free-return labels in your parcels. Printing those labels-even for customers who don't need them-is wasteful. Instead, ask customers to go online and print their own labels when needed.

We donate customer returns to charity or other institutions that need them. Not only are we addressing the issue of returns, but we are also helping people who badly need a product like ours."

-Stephen Light, co-founder of Nolah

Keep customers informed about the status of their return

For ecommerce businesses, brand perception and reputation is everything. Just one tweet like this can influence another customer's decision to purchase from you or a competitor:

"The most important question to ask when assessing your reverse logistics process," says Andrew Bowden, Senior Manager of Product Marketing at TradeGecko, "is whether or not you're designing and optimizing the experience for the customer or for your business-ideally, it's a mix of both."

"When in doubt, default to the customer. First, keep them up to speed on the returns process while in the flow, either by email or, preferably, via Facebook Messenger or SMS. If your OMS facilitates this, incredible. Second, get feedback and ratings on the returns process itself-that's where you'll find gold nuggets to set yourself apart from the competition."
Apple's return confirmation email. Source: Really Good Emails
Find a shipping carrier that supplies tracking information. Most offer tracking numbers for customers to see the location of their returned parcel. Once it arrives at your warehouse, send the customer an automated message to confirm you've got it. Give them an ETA on how long they should expect to wait for a refund.

Protect your business against ecommerce return fraud

Did you know that for every $100 in returned merchandise, retailers lose $5.90 to return fraud? It's costing US retailers more than $18 billion a year, and happens when people return stolen items, claim an item never arrived, or use the item and return it later.

It's crucial to separate the types of returners and track them automatically. A tool like Shopify Flow can help. Establish refund thresholds based on per-order dollar values or the number of returned items. Second, use that threshold to automatically:

Tag customers for identification and segmentation

Notify your customer service team via email or Slack to investigate

Add those customers as a segment within an onsite personalization tool to exclude them from free shipping and/or full-refund offers

Exclude them from free shipping at checkout by creating a Shipping Script based on one or more of your customer tags.

Some retailers-including Amazon and ASOS -are reportedly updating their returns policy to blacklist serial returners. While extreme, such actions are often necessitated by the first type of habitual returner.

If blacklisting customers isn't an option for your ecommerce business, there are other things you can do to prevent return fraud:

Choose a delivery carrier that supplies tracking numbers or proof of delivery. For example, a photo inside a customer's open doorway.

Substitute cash refunds for exchanges or store credit. There's less incentive for someone to try and return a stolen item if they're getting a like-for-like back.

Offer a longer exchange window than you do for a refund. This ensures your customer still has ample time to return but makes an exchange more likely.

Ditch free return shipping to make it harder for fraudsters to push their luck with return fraud.

Only process returns if the item comes with a receipt or proof of purchase. This prevents people from returning stolen merchandise, or items purchased from another retailer. You'll also see the exact amount they paid for the item to process a refund.

Don't accept returned items of clothing without the original tag or protective seal. This prevents wardrobing: when a customer wears an item and returns it as if it were new.

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Ecommerce returns are inevitable, but manageable

With 10.6% of all online purchases eventually diverting back toward the retailer's warehouse, ecommerce returns aren't something you can ignore.

Do everything you can to prevent returns-from writing accurate product descriptions to picking and packing items securely.

Remember that a small number of returns is inevitable. When it happens, keep customers informed about the status of their return. Choose sustainable options. Prevent return fraud by offering online store credit instead of cash refunds. Consider outsourcing reverse logistics if it's becoming too time consuming to handle in-house.

The returns process might be the final part in a first-time customer's journey with you. But it's still just as important as the first part.

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Ecommerce Returns: Tips for Success (2022)

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Ecommerce returns can be a disease-aggressively attacking profit margins, gutting conversion rates, and ultimately threatening your business. Collectively, consumers returned products worth $428 billion in 2020-just over 10% of total retail sales. The National Retail Federation estimates the cost of returns amounts to $101 billion. It paints a bleak portrait, especially for online retailers.

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M&S has proven it will “never be the same again”

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M&S has proven it will “never be the same again”

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Following its acquisition of Jaeger in January, M&S relaunched the brand in October, claiming that this received an “encouraging” response. However, while Jaeger’s new styles are definitely more stylish and modern, its price points are still in the premium range and significantly higher than M&S’s own brand, which may limit how much it resonates with the retailer’s existing customer base

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Marks & Spencer announced on Monday that it was bringing forward a plan to cut jobs due to the pandemic, with 950 roles set to go.

It is just the latest sign of trouble facing the iconic British retailer, whose sales and popularity have fallen sharply in recent years.

The firm says it was starting to get its house in order before the pandemic and was hit like any other retailer by the recent downturn.

But retail experts say its problems date back much further, and that the following criticisms still weigh heavily on the High Street giant:

While M&S's food sales have recently picked up, its fashion sales have remained in the doldrums.

The retailer has long been accused of selling clothes that are boring or conservative, and of not knowing who its key demographic is.

"In trying to be everything to everyone, they've ended up being nothing to no one," says Natalie Berg, retail analyst at NBK Retail.

Retail expert Kate Hardcastle agrees: "Generally they have got a 25-year-old model wearing garments targeted at a 65-year-old, who doesn't feel included."

However, the firm says it is changing. It recently strengthened its leadership team - bringing in Richard Price as managing director of clothing from Tesco clothing and Stephen Langford from Asda as director of M&S.com.

Since lockdown it says it has seen more than 700,000 new downloads of the M&S.com app - something it says proves it is on track to becoming a "digital first" business that reaches a wider demographic.

Another point experts agree on is that it is often hard to understand the thinking behind some of the business decisions M&S has made over the years.

One example is the Sparks Card customer loyalty scheme, launched in 2015, which was unsuccessful and has just been re-launched this month.

"Because they were so late to market with the rewards scheme, they had a significant amount of time to watch what best practice was and even improve on it, but they did it the M&S way," says Ms Hardcastle.

Retail Analyst Chris Field has doubts about M&S' decision to purchase a 50% stake in online supermarket Ocado, following claims it overpaid for the business.

"The money they spent on Ocado, that must have hurt, and there's no proof there will be a return," he says.

But M&S says the pundits are wrong. It points out it re-launched the Sparks scheme after consulting more than 250,000 of its customers.

And it says that Ocado - whose own sales jumped 40% in May - will help to boost the M&S food business.

"When we did the Ocado acquisition... I think it's fair to say that shareholders were pretty divided... We're not hearing any scepticism now," said chairman Archie Norman at the firm's annual general meeting earlier in July.

Some retail experts say M&S' central problem is that it doesn't listen to its customers, and isn't really engaging with any demographic.

"They don't connect with customers enough, so they never know what the customers want," says Ms Hardcastle.

In particular, she thinks M&S' traditional base of over-45s feels neglected.

When M&S made the decision to remove the free biscuits it provided with teas and coffees in its cafes, it triggered accusations of "stinginess" from upset consumers.

The firm says it was merely trying to reduce food waste and that biscuits are still available free to those who ask.

But the move made headlines and Ms Hardcastle suggests it was handled poorly, given that "successful brands excel in making fans out of consumers".

"If you were launching a retail business today, you wouldn't dream of recreating the M&S model," says Ms Berg. "We don't go into department stores anymore."

Mr Fields meanwhile says going to M&S is no longer an enjoyable experience: "Old mens clothes, next to mens suits, next to pants, next to childrenswear makes no sense anymore."

This is a worry in an intensely competitive retail climate, he says. However, M&S says "creating a store estate for the new world" is a key part of its transformation plan.

Many expect it will become more of a food than clothing business in the future. And certainly the retailer has shown willingness to embrace change.

In May, in response to the pandemic, it launched its "Never the same again" programme which aims to use the lessons of the crisis to "radically accelerate the pace and ambition of its transformation plan".

"While some consumer habits will return to normal, other have been changed forever," it said.

5. 'Iconic but not immune'

Despite their collective frustration and confusion with the retailer, none of the retail experts the BBC spoke to deny that M&S is still a powerful brand.

"In all of my years commentating on retail, I've never seen such an outpouring of emotion in a brand," says Ms Hardcastle.

"People loved them and what they stood for. They traded on that emotion, but they've not invested in the brand for so long, and that's why people get mad and sad about it."

The retailer is still trusted - on KPMG's recent Customer Experience Excellence List, M&S came in ninth.

M&S is also credited as being the British firm that "invented" the concept of corporate and social responsibility, which has earned it much goodwill from consumers.

"They have trust, and they need to use all that good will to sharpen the offer," says Mr Field.

Ms Berg agrees but says M&S must learn some hard lessons if it is to survive. "They're an iconic brand but they're not immune to the problems the sector is facing - the future for M&S is far fewer stores, but better stores."

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M&S: Five reasons the retailer is struggling

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M&S has brought forward plans to cut jobs in the pandemic, but its problems date back much further.

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To decrease returns, retailers need to get real with online product displays

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To decrease returns, retailers need to get real with online product displays