Marks & Spencer Group (M&S) executive chairman Stuart Rose said India and China will be key markets as the largest UK clothing retailer expands overseas.
International growth “is going to be a long-term journey,” Rose said at the Foreign Press Association in London. India is “ideally suited to the M&S demographic” and China will be a “viable business” in the next five years, he said.
The London-based retailer gets about 10 percent of sales from outside of the UK and aims to increase that proportion to about 30 percent, said Rose, who is due to relinquish control when Marc Bolland joins as chief executive officer in May.
He didn’t give a time frame. International grow th will help compensate for the UK, where “there isn’t going to be a lot of growth in the short term.”
“We’ve had a checkered history in terms of our overseas strategy, but to be a viable business you must expand,” Rose said on Thursday. “Because the brand is extremely strong, I believe we can sell more goods and services.”
Marks’s overseas expansion plans have faced some criticism, with Sanford C Bernstein analyst Luca Solca saying this week that “breakaway growth is not a good starting point” for Bolland. M&S should focus on its supply chain, food offering, direct sourcing and better branding, Solca wrote in a note.
“The key thing for Marc Bolland to do is not to repair the business, but to grow the business,” Rose said in response to the report “If you read the note, I don’t accept all the criticism in it. I would do it all again.”
Store openings in European countries including France and Belgium are also being considered, tho ugh opportunities are limited because of difficulty fi nding large enough store space, Rose said.
Outlets need to be about 30,000 to 40,000 sq ft “wh ich don’t become readily available.”
The chairman said the M&S store in China is “doing extremely well” and dismissed concern it’s filled with expatriate shoppers. The retailer will open a second outlet soon and “almost certainly” a third this year. Rose said he is “fairly confident we will be profit neutral in China within a year or so.”
source: Financial Chronicle
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