By Mark Potter and James Davey

LONDON, Oct 13 (Reuters) - British retailer Marks & Spencer (MKS.L) unveiled plans to upgrade its supply chain and boost its presence online and abroad in a strategy update that will feature presentations by internal candidates for chief executive.

The 125-year old group, which sells clothes, food and homewares from over 650 stores in Britain and about 300 abroad, said on Tuesday 13 October it expected to achieve annual benefits of 250 million pounds ($395 million) by 2015-16 from upgrading its supply chain and information technology systems.

It also underscored plans announced on Monday 12 October to revamp its Web site and said it would expand its business in central and Eastern Europe, accelerate growth via franchise partners and build sustainable businesses in China and India.

The strategy update, which marks M&S's first 'investor day' for a decade, also gives shareholders and analysts the chance to assess internal candidates to take on the role of CEO next year -- finance and operations director Ian Dyson, head of food John Dixon, and head of clothing Kate Bostock.

M&S has been under fire from some investors for allowing Stuart Rose to take on the role of executive chairman, which combines the roles of CEO and chairman, against corporate governance guidelines.

The company says it will appoint a CEO next year, when Rose will become non-executive chairman before leaving by July 2011, and would prefer an internal appointment.

M&S said its supply chain improvements would include shrinking its warehouse base from 100 sites to just four.

It expects capital spending on the improvements to total 1 billion pounds, including 250 million already invested.

"We've established a long-term vision for where we want to take the business which we believe will create long-term sustainable growth," said Dyson, who is in charge of M&S's 'Project 2020' strategy.

"At the heart of this vision is moving the business from being product focused, store centric and UK dominated to being customer focused, multi-channel and international"

SUCCESSION

Some investors are still unhappy with M&S's management succession plans, saying Rose may have to go earlier than July 2011 to ensure a smooth transition.

Others are concerned it might run into the problems faced by broadcaster ITV (ITV.L), which has seen a procession of big names rule themselves out of a top job.

Andy Bond, CEO of grocer Asda (part of Wal-Mart Stores Inc (WMT.N)) and seen as a strong external candidate for the M&S job, said this month he was not interested.

Charles Wilson, CEO of cash-and-carry group Booker (BOK.L) and a former lieutenant to Rose, has also ruled himself out.

Justin King, boss of supermarket group Sainsbury Plc (SBRY.L), and Marc Bolland, CEO at Wm Morrison Supermarkets Plc (MRW.L), have both also been tipped for the job.

M&S shares plunged around 60 percent last year as Britain skidded into recession and the firm admitted its upmarket foods business had been slow to respond to changing consumer demands.

But the stock has recovered around half those losses this year as M&S revived sales by cutting prices, stepping up promotions and introducing new products.

There are also signs of a broader recovery in British consumer spending, with a survey earlier on Tuesday 13 October showing British retail sales in September rose at their fastest annual pace for five months.

M&S shares were up 0.2 pence at 363.1 pence at 1235 GMT, valuing the business at about 5.8 billion pounds.

(Editing by David Holmes, John Stonestreet)