British retailer Marks & Spencer to return to France

Reuters, Friday 1 Apr 2011

Group with outlets in Egypt plots renewed approach to western Europe

British retailer Marks & Spencer will return to France this year with a mix of stores in Paris and its first foreign website, 10 years after abandoning western Europe amid a storm of protests.

The move is the first major international step by Britain's biggest clothing retailer, which also sells homewares and upmarket foods, since chief executive Marc Bolland took the helm last May.

The focus on a single major city and the Internet also signals a new strategy for future foreign expansion, though Bolland declined to say which countries it might enter next.

Marks & Spencer (M&S) has been criticised in the past for a scattergun approach to expanding abroad. The 127-year-old group has more than 350 mostly franchised stores in over 40 countries and makes about 10 per cent of its sales abroad.

M&S said it would open a 15,000-square-foot store later this year at 100 Avenue des Champs-Elysees, one of Paris's most famous tourist streets, and look for other sites in major shopping malls in the city.

It will also open several Simply Food convenience stores in and around Paris, selling shortbread biscuits, tea and sandwiches, and launch a French language website to serve the whole country in November.

M&S closed or sold its loss-making western European business in 2001 to focus on one of a series of turnaround plans for its main British operations.

The decision drew howls of protests from customers and staff alike, with Parisians, deprived of M&S specialities such as ready-made chicken tikka masala, opening a book of condolences and a dozen workers occupying the city's flagship store.

Stuart Rose, who stood down as M&S boss last year, long argued that his predecessors' decision was a mistake, and Bolland had signalled he would look at western Europe again.

Analysts said it was sensible for the 127-year-old company to look to diversify away from the tough British market, and the new strategy suggested it had learnt some lessons from its chequered history of international expansion.

"They seem to be going into the market in a more sensible fashion, adapting to the local market environment," said analyst Kate Calvert at brokerage Seymour Pierce.

"This is something that's building up for the longer-term growth of the business. But they have rather a lot to do in the UK to address short-term issues," she added.

British store groups including Dixons, Home Retail and Mothercare have issued profit warnings in recent weeks as inflation surges and government cutbacks bite.

M&S, which serves 21 million Britons a week from nearly 700 stores, publishes fourth-quarter sales figures on Wednesday.

Bolland said France was an obvious place for the group to launch its new international strategy, as internet orders could be fulfilled from Britain, and the brand is recognised by over 70 per cent of French consumers.

The French business should be "very quickly profitable", he said on a conference call.

M&S first entered France in 1975 and was still making a profit from stores spread across the country when it left.

After a plunge in profits at the start of the recession, M&S has been fighting back with new food and clothing ranges, keener prices and improvements in purchasing and distribution.

Bolland, enticed from grocer Morrisons by a 15 million pound ($24 million) pay deal, said in November he would spend between 850 million and 900 million pounds over three years to revamp and open more British stores, as well as expand online and overseas.

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