Choice of KPI
Choice of key performance indicators
The key performance indicators, set out here are judged by the Board to be those performance measures that are most useful in measuring the delivery of the Group’s strategy and the effective management of the business. They measure the increase in sales from the current store base, net change in new store space, total sales and operating profit growth, efficiency of the Group in its use of capital to generate operating profit and movement in net debt. The Board believe it is important to have a balance of key performance indicators which measure both operating and capital aspects of performance.
Total sales growth and operating profit growth are calculated using constant exchange rates to reflect the performance of the business rather than movements in the US dollar to pound sterling exchange rate. Click here for reconciliation to Adopted IFRS numbers. Similarly, the movement in net debt excludes exchange adjustments.
Performance targets
The management structure of the Group consists of a small corporate function and significant delegation to the US and UK divisional executive committees that are responsible for matters such as retail operations, merchandising, marketing, real estate and human resource management. The Board measures the divisional performance using the same key performance indicators as for the Group.
The Group targets largely reflect the goals and market position of each division rather than being driven by corporate wide priorities. For example the performance target for new store space reflects the individual targets for the US and UK divisions.
The performance targets used are measured over an economic cycle as the general retail trading environments in the US and UK are determined by factors outside the Group’s control. Furthermore the investment appraisal of store investment is carried out over a five year period.
Performance record
A five year record for each key performance indicator is given as the performance targets are set over an economic cycle and to provide a context in which to evaluate the most recent results. Whilst it is recognised that five years is unlikely to be a full economic cycle, that period of time normally reflects a variety of macro-economic conditions.
Other performance data
While performance data is collected by management for many purposes, including training, customer service, employment, environmental monitoring, and supply chain performance none were selected as a key performance indicator as they are reflected in the overall operating results. These and other statistical indicators are widely used in this document, in the management of the business, and in the performance appraisal of individuals.
Click here for key performance indicators.
Click here for full definitions of key performance indicators.