Operator: Good day, and welcome to the Marks and Spencer Analyst Call. This meeting is being recorded. At this time, I'd like to hand the call over to your host, Archie Norman. Please go ahead, sir.

Archie Norman: Well, good morning, everybody. It's Archie here, and I'm joined by Stuart and Alison, obviously. Thank you for joining us today. I was going to say, great to see you,, but I can't see any of you. So look, I think this is a set of results where we slightly feel we've said all there is to say about it, but I'm sure you'll think of some interesting questions. So let's crack on. Stuart is going to make a brief introduction, and then we'll take whatever questions there are. Thank you, Stuart.

Stuart Machin: Well, good morning, everyone. Thank you for joining us. As Archie said, Alison joins me in the room today. We've also got Fraser and Helen, so they're on hand for any follow-up questions you may have throughout the day. I'm going to start with a look back at the half from April to September before moving on to give you some detail on where we are today. I will then look ahead to Christmas before finishing with the outlook for the rest of the year. I want to cover 3 objectives that we set out a couple of months ago, which were, firstly, to regain momentum; secondly, get back on track with growth; and thirdly, accelerate the pace of our transformation. So let's start with the last 6 months. The first half, as I've said, was an extraordinary moment in time for M&S. I'm not going to go over all the old ground today because I briefed everyone on the incident during our call in May. But everything regarding the incident has been well documented, and we are now getting back on track. Our customers have been fantastic as always, and I want to thank them again for their continued support and loyalty during the period. I also want to thank our supply partners and of course, our colleagues across the whole of M&S, who showed real determination and grit. This support, together with the underlying strength of our business, our healthy balance sheet and robust financial foundations gave us the resilience to face into the incident and deal with it. At the prelims in May, we anticipated the material impact of the incident on group operating profit to be around GBP 300 million this financial year, and we are broadly in line with that. I can confirm that this is mitigated by GBP 100 million of insurance that we claimed and received during the period. This is the first set of results where we have consolidated Ocado Retail into our numbers. This is just an accounting change as part of the original joint venture, and it has no impact on our share of the business. Now let me just touch on the headline numbers because across M&S, group sales grew 22% versus last year, but that was driven mainly by the accounting inclusion of consolidating Ocado Retail. Excluding the consolidation of Ocado Retail, M&S sales were broadly flat with last year. Group profit before tax and adjusting items was GBP 184 million. And excluding lease liabilities, we are still in a net funds position. Now we put customers first and prioritize availability, which did drive waste and therefore, increased costs in our food business. With our systems off, we didn't have a clear stock view. And of course, we were using manual processes, but we took the decision to allocate stock out, fill the shelves, and that was the right thing to do for our customers. Despite the disruption in food, the business was resilient with robust sales growth of 7.8% in the half. Fashion, Home and Beauty sales in the half were down 16.4%. We had a particularly tough time here due to 3 key challenges. Firstly, we paused the online operations for just over 6 weeks and then brought them back gradually. Secondly, this impacted click and collect, which affected footfall into stores. And thirdly, supply chain disruption caused availability issues. As I said, this incident was an extraordinary moment in time. But change, on the other hand, is not a moment. And in M&S, change is a constant. We have a clear plan to reshape M&S for continued growth, and we have never lost sight of this despite the disruption. That is why we accelerated our transformation during the half with investment in our 3 priority areas of store rotation and renewal, supply chain modernization and technology transformation. On store rotation, we opened 15 new or renewed stores in the first half and we will open more than 20 in the second half. This includes opening 2 flagship full-line stores, Bristol Cabot Circus, which opens next week, and Bath open in February. On supply chain, in August, we announced a new 1.3 million square foot automated food distribution center in Daventry, which opens in 2029 to boost capacity for future growth, lower our cost to serve and improve product availability. A new regional food depot also opened in Bristol in 2026, increasing the proportion of stores served from their nearest depot. These investments are helping us get ahead of the growth curve and build a bigger, better food business. And on technology, we use the incident as an opportunity to strengthen our technology foundations and fast track some time lines, including the new Fashion, Home and Beauty planning platform. Our job is to ensure we continue to transform and grow M&S while maintaining a strong investment-grade balance sheet. That means being disciplined in our investments and their hurdle rates. Let me add a little color to each of our businesses. In Food, sales and market share growth are back on track. With 3 years of consecutive monthly volume growth outperforming the market, more customers are filling up their basket to M&S more often. In fact, the latest Kantar figures show that M&S is the fastest-growing store-based retailer in volume over the last 4-week period. In the last 12 weeks, we served 800,000 more customers year-on-year. In the half, customers made 14 million more shopping trips to M&S Food than the same period last year, demonstrating more people are shopping with M&S Food more often. You've heard me talk about our strategy, protecting the magic and modernizing the rest. In food, the magic means going to great lengths to ensure the absolute best quality, the leading on innovation and delivering trusted value. Our obsession with delivering world-leading quality continues to drive sales. Take our upgraded Italian meals range with sales up 1/3, for example. And our focus on innovation brings new products and new customers to M&S. Our viral Strawberry Sandwich sold 1 million units in just 4 weeks. In fact, we launched 700 new more quality upgrade products in the first half of this year alone. At the same time, offering trusted value is at the very heart of what we do. Sales of our value ranges are up 29%. Alex and the Food team have made good progress, but we have so much opportunity ahead of us as we work towards becoming a full shopping list retailer and doubling the size of this food business. Now turning to Fashion, Home and Beauty, where the recovery curve in this part of the business has been slower than in Food, as I said, due to the pause in online sales and stock flow disruption. But now with online back up and systems running, we're making progress every day. And over the coming weeks, we expect stock flow to settle into a more normal rhythm. Despite this, we used the period to make further progress in improving our product ranges because outstanding product sits at the very heart of our strategy for Fashion, Home and Beauty with the M&S magic being a combination of quality, value and style. We consistently lead the market in value and quality. And now I can say for the first time, based on YouGov report yesterday, we're #1 for style too. And the latest Kantar figures just out show M&S #1 in fashion market share in the last 12 weeks. This includes leading the market for womenswear and lingerie. So look, we're making progress, and this is encouraging, but there is so much opportunity in this part of the business, and there's lots for us to go after. John, as the MD has been here now 6 months and has started to accelerate the strategy, being laser-focused on the big rocks that we haven't yet really tackled, mainly the foundations of the business from sourcing through supply chain, through merchandise planning and accelerating our online performance. In international, sales were down 11.6% due to our international websites being offline and shipment disruption. However, during the second quarter, performance improved as we restored systems and websites. Mark and the team have now made encouraging progress resetting commercial terms with some of our franchise partners, which has helped enable investment in trusted value. We expanded our partnerships with Zalando and Amazon and put in place new wholesale arrangements, for example, launching lingerie in David Jones, Australia, already performing ahead of plan. The summary for international is we continue to -- it continues to be a growth opportunity in the medium term, but performance over recent weeks has been encouraging. Touching on Ocado Retail, sales were strong with growth of 14.9% over the half, driven by sales of M&S products, which grew faster at 20%. Sales growth has been encouraging, but we know there's lots to do to the path to profitability. Key opportunities include improving delivery efficiency with more same-day slots available, extending picking hours and rolling out further automation. These initiatives will boost capacity over the next few years and support the path to profit. To finish, I will turn to the outlook. As we enter the second half, the consumer environment remains as uncertain as ever. As always, our priority is to offer the best product value, quality, innovation and of course, in fashion, style. We will continue to drive our transformation and to structurally reduce our costs to offset external headwinds. For context, during the first half alone, the increase in national insurance contributions and packaging tax cost an extra GBP 50 million. But there is much in our control and the increase in our cost reduction ambition will help to address this. We're confident we will be recovered and fully back on track by the end of the financial year. In the second half, we therefore anticipate profit at least in line with the prior year as residual effects of the incident continue to reduce in the coming months. Our plan to reshape M&S for sustainable long-term growth is unchanged. Our ambitions are undimmed and our determination to knuckle down and deliver is stronger than ever. To date, we have delivered meaningful progress, but that's what's exciting because there remains so much more to do. And for us, it's all to play for. I'll hand back to Archie for questions.

Archie Norman: Brilliant. Thank you, Stuart. Okay. We've got a few hands up for questions. So let's just crack on Frederick Wild from Jefferies. But by the way, could you be helpful if just one question at a time because our memory is not very good. And -- we take a couple each. All right, Frederick?

Frederick Wild: So first of all, I'm going to ask a terrifically boring question, I'm afraid. Could you give us a few more details on October trading in Fashion, Home and Beauty, what sort of the overall sales growth was have you seen versus the market?

Stuart Machin: Well, look, I mean, top line, as you can see, the market has been soft. You can look at the graphs in the RNS because we put those in to help people understand. And there's a couple of things. I do think people are holding back a bit because of the budget, but also the market is soft because the weather -- I'm looking here, I mean water side and it's bright sunshine. Autumn hasn't even hit yet, never mind winter. So the market is somewhat soft, and the market is very promotional. I think the latest stats I saw was high promotional participation averaging 50% already. For us, look, it is behind the curve slightly. I think there's some good news because we're not quite where we want to be yet on Fashion, Home and Beauty, but every day is getting better. And I think by the time the cold snap arrives, we will have pretty good availability, especially around fashion. So I think it's working in our favor at the moment.

Frederick Wild: And then beyond that, with the -- at least in line guidance for half 2, can you help me understand the sort of moving parts within that, what could get you above be in line? And is it the consumer backdrop? Is it the speed of your availability? How should we measure that and think about that?

Stuart Machin: I'll give a high level and hand over to Alison for some detail on this. But Look, in half 2, if you just compare last year, I think in Food, we're on track. I mean it could be a bit better. We're planning for a good Christmas. But I never like to overpromise and underdeliver, but we're getting back to stronger growth in food, and it's all to play for, as I say in my opening. In Fashion, Home and Beauty, we are concerned about the weather. It is something that I don't like to talk about internally, if I'm honest. I always say don't blame the weather. But on an analyst call, it is helpful just to bring it to life because if we do have a cold snap, I think we'll be pretty well set up. So my summary, Food could be a bit better and Fashion & Home could be a bit softer, but we're planning for a good Christmas, and we'll see. I'll hand over to Alison for some detail.

Alison Dolan: Thanks, Stuart. So really, I would say it's all about the pace of recovery in both businesses. As Stuart has already said, we're gearing up for a strong Christmas in Food and then a good new range to launch in the fourth quarter. All of the systems that we need now to manage waste and stock loss are fully back and each week sees an opportunity -- season improvement, sorry, in waste, and we are getting to grips with it. In Fashion, Home and Beauty, I think for the third quarter, as the systems come back online, they are now all back, but stock is not in the right place everywhere. If you think about all the moving parts in our distribution network, getting stock out of ports into the right DCs that allow us to fulfill online orders as well as dispatch stock into stores. That is still being worked through in the third quarter. We expect it will be fully done, certainly by the financial year-end, but operational in the fourth quarter as well. And then Ocado, we expect to continue with their strong sales. International really to have a good strong year. And as far as cost is concerned, we continue to focus on cost elimination, as you've already heard. So really, that is all playing into an expectation that at least we will be flat in the second half to the comparable period last year, and then you'll have a judgment to make as to where to take us up from there.

Archie Norman: I think Alison and [ Fredrik ] just quickly raises a good point on food waste. We're getting back now online. Clothing, we're just mindful we're holding a bit more stock for the second half. So we need to manage that. There is some good news on new stores in H2. We've got 10 new food halls, 4 food store extensions, 7 renewals and 2 new full-line stores. So there's some positives. I think my summary would be we're confident we're going to start FY '27 in a good place. Okay. Good questions. Thanks, Fred. James Anstead. James?

James Anstead: So you've had this cost of GBP 324 million in the first half of the year. I just wonder, you're clearly now getting very close to being back to normal, but how much more do you think that might tick up in the second half? And associated with that, and I do appreciate fully that you rarely give PBT guidance for the current year, let alone next year. But if effectively, you're guiding for PBT of at least GBP 652 million this year and the cyber impact, which is probably going to tick up a bit from GBP 324 million. Is there anything wrong with starting my spreadsheet for next year with a PBT of about GBP 1 billion. I appreciate there's a consumer outlook that we have to take a view on, and there's hopefully some underlying growth in the core M&S business. But are there any technical bits, Alison, you would say that's far too naive a starting point?

Alison Dolan: Well, I'll start with the first question, James. So above the line in terms of any lingering impact on trading, you've already heard all the detail there. There's nothing beyond everything that we've set out, which is largely about the pace of recovery, particularly in FH&B and making sure that stock is in the right place. And that is in relation to the GBP 324 million impact. Below the line in adjusting items, there will be about GBP 30 million of incremental cost in the second half as we finalize standing down all of the incremental resource that we've talked about earlier, largely replacing offshore E&P colleagues with onshore resource augmentation. That will carry through into the first couple of months just as we stand that resource down. But beyond that, there's nothing. And then with respect to your second question, James, no, not really. The only thing in addition to, there's nothing technical from our side. As Stuart already said in relation to the last question, our expectation is that we are fully back to normal by the fourth quarter of this year, so that FY '27 is a clean, unimpacted year. And the forecast that you had previously in place are good for FY '27. There's nothing beyond that.

Stuart Machin: I think, James, just to build on that, only a couple of summary points, a bit cheeky question on the numbers. But there's no change to our view for next year. We're in line with sort of where the consensus is currently, free to take your own view on that. But I would say we've got quite a bit of recovery in the next 6 months in Fashion, Home, Beauty and the consumer outlook is still uncertain. We're getting a lot of feedback about the sort of nothing presentation yesterday. Everyone's waiting for the 26th of November. And so the next 6 months is going to be a bit uncertain. We're hoping to start fresh, as I said, in FY '27 and be back by then. But I wouldn't overdo the ambition.

Archie Norman: Okay. Thank you, James. And -- if you need help with your spreadsheet, Fraser can help -- you got a computer program. Let's go to Anne Critchlow and then we'll see Clive Black has joined us. So we'll go to Clive afterwards. Anne?

Anne Critchlow: I just wanted to ask about the spring/summer fashion stock from this year. Is there any stock overhang as into the not marked down or sold through? Anything you're overwintering, anything that might need to be written off or down in the future, please?

Stuart Machin: Well, it's a good question, Anne. I mean we have provided for that in the numbers. If you look at our stock cover, I'm a few days out, but as of a few days ago, we had 13 weeks stock cover. So that was 2 weeks more than last year. So we have provided for some of that in H1 already and we are holding more stock as of the half year. So it's in the H1 gross margin, you can see where we provided for it. And unfortunately, my whole strategy about not having a sale is not going to be achieved this year because when John joined us as the new MD, I said one of the key objectives is everyday pricing, let's get rid of sale and not do it. And then obviously, within 1 week of him joining the incident happened. So there's a lot to go after, though, and it is a bit uncertain, but we provided in H1. And now we'll see how winter trades, and we are going to make sure we sell our way through in H2. And that's a bit uncertain as we sit here today in the sun.

Anne Critchlow: Okay. That's helpful. And could I ask -- could I ask a second question, please, on systems. So just wondering to what extent there's been a temporary fix that will perhaps need redoing. And to what extent the cyber incident might have accelerated? What you're going to do anyway and perhaps even made it simpler and better, and any examples you can give?

Stuart Machin: Well, I'll start and maybe Alison has some thoughts as well. Our biggest priority for technology is recovery. And as part of that, there are some things, by the way, that we didn't bring back up. I mean there's a system in food called RTA that was very old, very clunky. It used to basically give better split of products in our DCs in different price. But actually, we haven't brought that up because we're going to buy a more simpler modern system. But really, it's all been about recovery. And now if I'm honest, it's all about resilience for Christmas. So there are some things like that food system. In John's business, he's taken a fresh look at the o9 planning platform and has actually sped that up. I mean it's going to take half the time of what it was going to take. And there are some other things we're doing like investing in loyalty, which really we're playing catch-up on. So my summary is, we haven't really accelerated a lot. We haven't really opened some systems that we didn't think -- either we thought we didn't need. But really, our transformation is going to get back on track by the end of the financial year. And we'll also talk about this at the Capital Markets Day.

Archie Norman: Clive, we assume that you -- I didn't want to apply your late meeting, by the way, but we assume you're celebrating in Liverpool.

Clive Black: Indeed, Archie, I was actually on time, but your systems clearly haven't got up to speed yet. But -- and also, Archie, it's great to know that you're going to be hanging around Paddington for a little bit longer than they have been the case, which is good news for everybody in my book. So first question, if I may. I'm going to try and stay away from everything from the spring. And I know you have a Capital Markets Day coming up. But Stuart, in your video this morning, you talked about M&S being a shopping list grocer. I just wondered what does the firm need to do to reach that aspiration? And what does it actually mean to M&S?

Stuart Machin: I mean, Clive, in simple terms, what we're realizing in our bigger food halls, where we've got more of a grocery range that includes frozen food, our customers are relying on us to do a fuller trolley shop. I see this in my local store in [indiscernible] where over half of the shopping trips are in big trolleys and the other half of baskets. And if you look at all of our data, not just recent, but the trend in the recent years, more customers shopping more frequently and our spine of the basket, which we call center of plate, the key commodities customers buy and could buy elsewhere, that has actually grown in this half by 12%. So the key to this is the store rotation program. As you know, we're only 4% market share. I will say to Alex, it's still piddly, is the term I use, it's still small, which really just encourages us because we've got more than 50 food stores in the pipeline already approved. And that means that gives confidence. Now one of the key investments that we made during the last 6 months was -- which I called out in my opening and it's in the RNS, which is our Daventry new distribution center. Now that's 2029. But the reason we needed to commit and invest in supply chain is so we get ahead of that growth and enable that growth. So I think we're well on track. The food business is in a strong position, whether it's building a better supply chain, the work Alex and the team are doing on what we call factory resets and fortress factories, the strategy about really close partnerships and the work we're doing on range, importantly, the work we're doing on value. And we're tracking all of those top 200 items every day. Inflation is a challenge for us to manage with the extra costs headwinds that not just us, our suppliers have had, that all gets passed through to us and it becomes a challenge. But our value lines are up 30% in the year, and our value perception has the greatest increase of any other grocer in the last 3 years. So all of that added together should enable the food business to be more of a bigger shopping list retailer.

Clive Black: And of course, I think you also said you still plan to double your market share in your statement this morning. And then in a similar vein, if I may, you talked about also seeing the opportunity to double your online sales in Fashion, Beauty and Home. And I guess, again, what are the mechanics by that? And just as a sub-question, I presume you still have ambitions to build, to grow your in-store activities in this respect as well.

Stuart Machin: Well, I think the key thing, online sales, I mean, we said double the online sales, I think, from FY '22, which were GBP 1.1 billion. And our plan is to double that. At the moment, only 1/3 of our Fashion, Home and Beauty sales are online. And of course, that's been impacted in the last few months. But we have not lost sight of that long-term ambition. And that's very clear. Don't forget in Home and Beauty, our participation is actually very small. It's not going to be the biggest part of our strategy, but there is opportunity to grow and improve our home offer, and we will be doing that over the coming years and resetting our beauty categories, which is under review now. I think the biggest thing, just to go back on Food, just to clarify, we said double the food business. We really mean sales hopefully, that leads to a much bigger market share, of course. I think we're in a good place online. We serve over 21 million customers, but let's be really frank, we have got to do a better job online. We want to do much better on service, much better on availability, much better on personalization. There is no short of demand when it comes to our customers wanting more, whether it's in store or online. So we've got to be quite ambitious, but there's quite a lot to go for over the coming years.

Clive Black: Do you see a switch out of in store into online, sorry, Stuart, just to finish as part of that process?

Stuart Machin: Well, I'm hoping not, but I'm hoping we hold a lot of our stores flat at the same time. I mean online market share for us is 7% stores is higher at 12% and obviously, the focus is going to be online. If we could hold the stores, that would be good news.

Clive Black: Sorry to interrupt you, Archie.

Archie Norman: No, no. Thank you, Clive. Good clarification. Just to be clear, the doubling of the online is from 2022. So that would take us to 50%, the objective to get to 50% of total sales. Thanks, Clive. That's great. Let's go to Georgina Johanan, and then we'll move on to Richard Chamberlain. Georgina?

Georgina Johanan: I've got 3, please. I'll ask them one at a time. The first one was just in terms of the Fashion, Home and Beauty sales, obviously, I appreciate the consumer environment and so on, but it would be good to understand what you've got planned in terms of any activities to sort of reengage that consumer and also the time line on that because presumably, you don't want to be sort of overly reengaging at a time when availability is still a little bit below where you'd like it to be. That's my first one, please.

Stuart Machin: I mean, Georgina, in simple terms, I mean, where you're dead right is we could probably say we reengaged our customers too quickly before we were really ready with availability online. But we've got no issue with customers' engagement, but we have got to get the stock flowing better. And the only thing working in our favor, by the way, is that, as I said, it's very sunny here in Waterside. I don't know where you are, and we're hoping the cold snap will arrive just in time when our winter product arrives and we're ready to serve. But we don't have an issue with demand, but we are a bit slower than we would like in getting the stock from supply through to our ports, through to supply chain, through to stores, through to online. And this is John's priority as we plan for Christmas.

Georgina Johanan: And perhaps just a follow-up one there, Stuart. When you're saying you don't have an issue with demand, is there something that you can sort of point to for that? Like, for example, is web traffic a lot stronger than we can see in terms of the actual sales data and perhaps conversion is down? Is there anything sort of tangible that we can point to there?

Stuart Machin: Well, it's a good point. The reason I don't say there's a problem with demand is we're holding our own. In fact, our market share has improved in the last 4 weeks, if you look at Kantar. If you look at the YouGov results yesterday, it's encouraging. We're back to #1 on brand buzz. And as I said, for the first time ever in history, we're #1 on style. Now that doesn't mean we'll always be #1 on style, but it is the first. And if you look at traffic, I haven't got the number. I can't remember it, and [ at the start, ] but we'll get someone to find the number, but traffic is actually sharply up on last year. To your point, online sales are up over recent weeks. Transactions are up, but we have got to get a better availability. By the way, a session I had with Maddy and Helen just last week, you will probably notice this, but we do have a bigger demand for smaller sizes. And that's been a trend over the last 3 years. But actually, it's one of our biggest problems today online. I've just been given a scribbled note from Fraser that says September traffic was -- September traffic was up last week, 17% on last year. Traffic September up 21% in September, last week up 17%. Another one?

Georgina Johanan: Yes. If that's right, please, it was just on CapEx. I guess just understanding if I was understanding right in the release that it's actually going to sort of GBP 650 million to GBP 750 million for this year, what we should be looking for in the outer years and why we're seeing that increase, please?

Stuart Machin: Okay. It's a good question. I'll hand to Alison.

Alison Dolan: Georgina, thanks. So you'll be aware that we have continued through the half with our strategic programs investments, so in supply chain, in stores and in D&T. Obviously mindful to protect our investment-grade rating, and that is a key priority. But as the cash generation comes through, our ability to maintain that investment, see the returns coming through, invest, as Stuart said, in the online experience, both on the website and on the app behind growing that traffic means that we can increase the envelope slightly. Depending on a particular year, there will be some disposals that we can offset that with. But we are a growth business. We have opportunities to invest behind, and we'll talk a lot more about the details behind that at next week's CMD [indiscernible] just all while aiming to grow the dividend as you've seen today.

Stuart Machin: I think that's right. I mean, I would say strong discipline. We've got clear hurdle, right, Georgina. But as you know, some of the big bumps in that CapEx will be things like the NBC, which we've already announced as well. And the focus areas of stores, supply chain, D&T, and that includes online as well.

Archie Norman: All right. Thank you, Georgina. We're eating up the time. So I just ask people to go at a bit of a cliff if we can. Richard Chamberlain from RBC, and then we'll go to Adam Cochrane and Deutsche. Richard?

Richard Chamberlain: I'll stick to 2. I know you've got your CMD next week. So both on the clothing side, please. What's the timetable now for upgrading Sparks next year, I think you're talking about and what needs still to happen for that to take place? That's my first one.

Stuart Machin: Thank you, Richard. Well, it's a short answer because in Sparks, we had a plan 6 months ago that we literally just paused and said we will come to it when we're through these last 6 months and the incident. And we've only just started to put resources from D&T back onto that program. What that will focus on is real personalization. It will focus on experience, but it won't be a big bang relaunch. There will be some good news, some good partnerships, but it will be a better way of engaging with customers and giving them a more personal service. It won't be a rewards, i.e., a different price architecture for those customers. I've never been a fan of loyalty card pricing. We research this all the time. But for us, to stand out from the crowd and try and deliver better value and value every day is an important underpin to our strategy. But really, this is all a way of getting closer to customers. It's not going to be one big bang. It will be a relaunch in March or April. And then basically, every 6 months, we will continue to improve loyalty over the coming years.

Richard Chamberlain: Got it. Okay. And my other one is just on marketing spend. I'd just be interested in what's been happening on that and thoughts on whether you need to step that up now to continue sort of regaining the top line momentum in clothing. I think you rephased some marketing from sort of earlier in the summer to early autumn, if I'm not mistaken, I mean, for obvious reasons. But just wondered, yes, thoughts on sort of marketing, whether that needs to go up a bit now.

Stuart Machin: I mean my summary for this, it won't be more spend. I'm not giving our marketing team any license to spend more, but it is about relooking on how we spend it. I mean, for example, there is no big fashion Christmas advert this year. We have decided to do more product ads more through social. There's different ways, we want to use YouTube and social media. So I think it's about spending it differently. The thing we've been conscious of and we're watching is making sure we spend it in line as product availability improves constantly, and that's across Fashion, Home and Beauty mainly. In Food, we're on track, and we're spending in line with the budget we laid out.

Archie Norman: Thank you, Richard. Okay. We'll go to Adam at Deutsche, and then I'll take a couple more. I think we're going to run out of time. So I know everybody has been waiting very patiently. But Adam, crack on.

Adam Cochrane: Just the first one, you talked about the confidence of clothing being back on track. I know over the summer, you possibly lost some customers to other retailers. Is it apparent that you're already regaining those customers who have shopped to other retailers and are now coming back to M&S?

Stuart Machin: Thank you, Adam. Well, I'm saying getting back on track. So I haven't said we're back on track. We are planning that by the end of this financial year, our Fashion, our Home and Beauty business will be back on track. I mean, I think the biggest issue we had, obviously, through the incident was the lack of availability and the online business being paused. And therefore, that obviously did set us back. But as I said at the start, we're back to #1 market share in the last 4 weeks when you look at Kantar out this morning. So we're back to #1. Our product is definitely resonating. Our value is resonating. And as I said, we're #1 for style on YouGov, which came out yesterday for the first time ever in our history. So you would have seen in Kantar the improvement every month. And I think we put some of that in the RNS. So the reason I don't want to get overpromising is there is a tendency for us to say, isn't this great? We're all back to normal. But actually, it takes a bit longer in Fashion for the stock to flow, for the systems to reconcile the stock, so we know exactly where it is. And we are carrying a bit more stock than we would like. We've got to get through that. We've got to look at what's going to happen over autumn/winter. There's no autumn yet. It's not an autumn yet. Let's hope for a cold snap winter. And then we need a really clear plan as we get into the Q3, Q4. So I think it's all to play for. There's no short of demand, but stock flow has to catch up, and it's on John and his team's priority list. We go through it daily.

Adam Cochrane: Okay. And on the international. And just very quickly, the expanded agreements with Amazon and Zalando, what proportion of the range are they able to access? How excited are you about increasing the growth internationally by the aggregators?

Stuart Machin: I think it's a very good question. What I would say is it's very, very small. It's really testing and learning. If you look on there, you'll see on Zalando and Amazon. It is encouraging because the brand resonates, so we know that, and it's slightly ahead of our plan, but it's very small in the grand scheme of things. But I think in a year from now, this will be a good opportunity for our international business as we get more of our range on both of those sites. And I think more broadly, what Mark and the team are doing with our partners will set us up for future growth. The reset with our franchise partners in terms of how we do the agreement encourages our partners to invest. It encourages our partners to deliver better value. And in some markets, I mean, last week, I was looking at the UAE and Food is very small and the volumes are small. But just by right pricing, that business was already up 70%. Now I will say 70% up on things that never really sold much volume. I think resetting all of that is good news. And the third, the wholesale partnership, it's not just about Percy Pig in Target, although the sales of Percy Pig in Target U.S. are way beyond what we expected. So we're now putting more runs of Percy Pig on. But the wholesale partnerships, I do think in the medium-term is a growth opportunity, whether it's David Jones Lingerie, we're going to launch womenswear as well soon, then menswear. So I think there's good opportunities in the medium- to long-term for us to be this global brand that we set out last year.

Archie Norman: Okay. Thank you. Well, now look, we're over time, but I'm going to go to Monique Pollard because you've been waiting very patiently. And then Warwick Okines and then we [indiscernible]. Monique?

Monique Pollard: The first question I had was just on this availability issue. So what I understood that you were saying, Alison, is that the -- am I right to understand that the availability issue is more acute in online for Fashion, Home and Beauty than it is in store? If you could just give us some color on the sort of the differences in availability store versus online?

Alison Dolan: Not particularly, Monique. Availability was affected by the slower stock flow, and that applied to both businesses. In online, it's slightly compounded because we don't fulfill online orders from all of our DCs. So there was that additional complication, but really both businesses were impacted.

Stuart Machin: I think the summary, Monique, is we're about 5% off at the moment where we want to be. But every day is getting a bit better. Our online availability this morning, for example, was down 1% on last year. So every day is getting better, but it is split between stores and online. Your second question, Monique.

Monique Pollard: Yes. The second question, just a quick one. It's on the U.K. budget and the potential for business rate increases. So if we do see business rates increase for ratable values over GBP 500,000, what kind of impact does that have on your cost base on an annualized basis, please?

Stuart Machin: Well, that's a complicated one. I'll hand over to [ Alison Dolan. ] I think the -- a couple of things to just summarize, as you probably know, is this half year, with a GBP 50 million. And that's only on 2 things: one, the packaging tax; and two, the increased, what I call the double whammy on national insurance. So that was GBP 50 million for the half. When you add that to living wage, which for us, we already plan to increase wages for frontline colleagues. So we look at that as a good cost, but that is GBP 150 million for the year. I think what really worries us is what's coming down the line. We have this deposit return scheme, which is a huge headwind, a challenge in stores operationally. The setup of that is nearly GBP 30 million. Running that is a GBP 7 million cost every year for these huge monstrosities of this unit in every store for customers to bring plastic back. And by the way, in the Republic of Ireland, they break down every 5 minutes. And on top of that, you've got other big impacts because it's not just about us. All of these impact our farmers, impact our suppliers and then all of those costs get transferred to us, and then we try and mitigate them in order to provide value. So -- and I think it's not just that it's other regulatory stuff. So we've been working quite closely with people in government, talking to them about these challenges every day, hoping to influence in some way. I've met Rachel Reeves a few times now, but it is top of our mind, and we're hoping. Well, we're preparing for the worst on the 26th because everybody -- it's a bit of a nothing speech yesterday. We all sort of finished it saying, well, what did that really mean? But we're sort of planning for the worst and hoping for the best. Alison, on our particular numbers.

Alison Dolan: Yes. So I would just say that at the moment, our business rate still is about GBP 180 million a year. So it's clearly material talking about that one specific item. And obviously, any increase also has the potential to be material. About 60% of our properties have a ratable value of over GBP 0.5 million. So the rumored break for larger stores would clearly be welcome for us. But that's about the scale of the bill right now. But I think...

Stuart Machin: About GBP 7 million benefit.

Alison Dolan: It's about GBP 7 million saving if we were to get that break, yes. But I think the bigger point really is in the aggregate of all of this new government-induced incremental charges. The EPR, for example, alone that Stuart talked about was a GBP 40 million charge for the year. The deposit retention scheme, big one-off upfront. NIC business rates, the apprenticeship levy, we can only use about 20% of it, and that cost us about GBP 7 million a year. So it's a combination really of all of these official regulatory costs.

Stuart Machin: I think the only good news, Monique, for us is there's a lot in our control. Our investment in things like supply chain automation will help give better productivity. So that's why we've increased our cost saving program -- so there's a lot for us to go after as well.

Archie Norman: Okay. All very good points. Thank you, Monique. Right. Look, apologies for those who haven't got in. I appreciate people have been waiting, but we're running down the clock. And we will make sure we get back to you those of you've been waiting. So I appreciate that. Last one, last shout from Warwick Okines at BNP.

Alexander Richard Okines: Just 2 quick ones to finish off, and I'll do them both at once and test your memory actually. These are quick ones. Firstly, on costs, you may have answered this already, Stuart, but you've raised the structural cost savings target to GBP 600 million. So is there anything particular to call out on where those savings have come from? And then secondly, could you give us a bit more detail about what your customer barometer is telling you?

Stuart Machin: Okay. I'll kick that off. On GBP 600 million, we set by FY '28, mainly through end-to-end supply chain. There's quite a lot in our plans for that and also some of our factory to floor programs and store productivity programs. By the way, we've never really got under store-friendly deliveries, which means our stores spend a lot of money unpacking things 3 or 4 times. And the good news is it's the first thing John Lyttle raised when he did his first month in stores. So whether it's supply chain or end-to-end through our stores. Look, it's a challenge, but there's plenty of us to go after on the cost side. That's why we set the GBP 600 million to start to mitigate some of the extra headwinds coming our way. In terms of customers, I mean the good news is we talk to quite a few customers every month. We have a collective where we talk to about 40,000 customers, and we ask their view, and we have 1,000 customers in Fashion, Home and Beauty and we get their views. There's never big changes, I have to say. The October survey really calls out customers talk more about rising costs. They talk a lot about the budget. There was a lot of questions, why does it take so long to set the budget. There's a lot of emotion in there about blaming the past all of the time that this is going to be a break in the manifesto and therefore, does it mean I'm paying more tax. Pension -- slightly older customers have pensions on their mind. and capital gains on their mind. So there's no doubt that takes the big part of the feedback we get. But at the same time, it's not all doom and gloom because when you get those issues on the table, what actually comes out is, well, we're looking forward to a bigger, better Christmas. And actually, we measure what we call excitement and positivity about Christmas and how you plan to celebrate. And that for our customers, of which now there's a few thousand in that pot, as I said, that's been the highest it's been. And if we just look at the early indicators, Christmas food to order is already up 7% on last year. We launched third-party food in stores. It's always an introduction, but that exceeded our expectations. And even if we look at some of the other things like Christmas decorations or the gift shop, I still think we need to relaunch this in a much better way in the years to come. But even that's trading 20% up. The softness is in fashion, but that's because of the weather and us catching up. But that's really the summary. I hope that helps.

Archie Norman: Good. Well, look, thank you so much, everybody. All good questions, and there's a lot we could still talk about. But I think we should draw a line there. There's a lot of work to do, obviously. And just to remind you, those of you who are coming or able to watch, we have got a Capital Markets Day next week. By the way, we're not really expecting to mention the C word on that day at all. Stuart looking at me grinning. And there's going to be a forward-looking event and a chance to able to meet the management team. So I hope those of you who are coming will enjoy that. So we look forward to seeing you all there or thereabouts shortly.

Stuart Machin: I thank everyone for your support and questions, and please shop with us this Christmas. Thank you.

Operator: Thank you so much, sir. Ladies and gentlemen, that will conclude today's conference. Thank you for your attendance. You may now disconnect. Have a good day, and goodbye.