UK group resurrects one-time global goals

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Rose is looking globally after M&S’ dramatic turnaround. (Getty Images)

Marks & Spencer has announced plans for a major push into China and India, after unveiling a first half profit slightly ahead of forecasts.

CEO Stuart Rose revealed the company has targeted that international business will account for 20% of revenues by 2012, up from current business reaching less than 10%. The group announced a £1 billion (AED7.5 billion) share buyback, after profits before tax rose 11.5% to £451.8 million (AED3.4 billion) in the 26 weeks to September 29.

The company revealed it is set to enter China on a wholly owned basis. A deal to open a store in Shanghai will be announced before early next year with other stores expected to follow, Rose said. M&S aims to move up to bigger formats of around 40,000ft² with the focus on New Delhi, Mumbai, and Bangalore.

Three or four Indian firms are believed to be interested in partnering with Marks & Spencer in the venture, which will be 51% owned by the British firm, according to reports in the Economic Times.

M&S, which currently has about 20 franchises operated by India's Planet Retail, will also sell food and home furnishings under the new format, the reports suggested.

Rose also hinted that M&S could move back into the US, where it finally exited only last year, but this time through its newly launched Internet store M&S Direct. M&S Direct sales rose 60% in the first half, with a target of AED2.7 billion (US $739.2 million) of sales by 2010.

The sales contribution from the group's international operations is only 7-8% in the current financial year but the plan is more than double this to 20% over the next five years.

Under the stewardship of Carl Leaver, the international division will rebuild its presence in the heart of ‘old' Europe, China and India. Analysts believe that M&S will need to drive growth by building up new formats such as standalone Simply Food stores and home shopping.

Ten years back, Sir Richard Greenbury, then chairman, announced an ambitious expansion. Citing the global success of hypermarket giant Carrefour, deputy chairman at the time, Keith Oates said the group would expand into Europe, the Middle East, Latin America, India, China and Australia, with plans to build new formats such as standalone Simply Food stores. The international dream, however, lay in tatters just three-and-a-half years later with the departure of Greenbury and flagging profits.

M&S has 250 franchised stores overseas, and has opened three shops in Taiwan in conjunction with a local partner, in addition to eight wholly owned stores in Hong Kong and 16 in Ireland.

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