To critically evaluate the usefulness of the strategic report, we reviewed earlier versions of M&S annual report. In 2015 the chairman wrote “(…) M&S is a (…) better-equipped business than it was a year ago.” This was followed by a 34% drop in share price, but the 2016 chairman’s letter did not address this issue, only stating, “We are focused on strengthening our position”. In 2017, this chairman left the company and the new leader in 2018 commented that “The genesis of any turnaround starts with the recognition of the ‘unvarnished truth”. This shows for years, shortcomings that led to the continuous fall in the share price, were not mentioned in the strategic reports.
The company’s return on equity is 15% which is greater than the industry average and shows that the company is generating a higher profit per investment.
The sales revenue has decreased, which according to the chairman is due to “range creep” in their clothing lines, poor online presence and store layout. Although the company has reduced its operating expenses, its net profit margin has also decreased since the decreasing expenses couldn’t compensate for the decrease in revenue. The decrease in expenses is good for the business but with the looming Brexit, these expenses are likely to increase e.g. import duties, transport and suppliers pushing the cost to the business and this may threaten the company’s profitability.
Regarding liquidity, the company’s current ratio has decreased and is lower than the industry average; meaning it may be having trouble paying its short-term obligations. Although its cash flow has improved, retained earnings and dividends have decreased which may be an indication of cash flow strain. 
The average collection period of the company has improved but is below the industry average. Although this is good, this may have contributed to the decline in sales as competitors may extending credit to their customers, causing M&S to lose out on potential customers who may want to buy on longer credit terms.
Gearing and interest cover have improved due to a decrease in long-term liabilities and interest payable; showing that the business can pay the interest arising from its debt.
The proposed investment in Ocado Joint Venture will be financed through a rights issue which may dilute the earnings per share. Though the market perception of its shares has improved probably because of the joint venture, it is still below the industry average.
Although M&S’s group has a strong brand reputation, this was threatened by its recent removal from the FTSE100 index for its decreased market capitalization. However, the public perception of its clothing sector is it has outdated fashion and tends to focus on the older generation leaving out the younger demographic. The Company faces steep competition from online retailers but has been expanding its online presence by 9.8%. It also decided to simplify and digitize their operating model. This coupled with new leadership shows the business is promising and is still a viable investment option.
Reference list

Annual report. (2018). Annual report. [online] Available at: https://corporate.marksandspencer.com/annualreport.
Annual report. (2015). Annual report. [online] Available at: https://corporate.marksandspencer.com/annualreport.
Investing.com UK. (2019). Marks & Spencer  (MKS) Financial Ratios – Investing.com UK. [online] Available at: https://uk.investing.com/equities/marks—spencer-group-ratios [Accessed 24 Nov. 2019].
Reuters Editorial (2019). MKS.L – Marks and Spencer Group Plc Profile | Reuters. [online] Reuters.com. Available at: https://www.reuters.com/finance/stocks/overview/MKS.L [Accessed 24 Nov. 2019].
YahooFinanceUK. (2019). Yahoo Finance – stock market live, quotes, business & finance news. [online] Available at: http://www.uk.yahoo.com/finance [Accessed 24 Nov. 2019].

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