M&S retreats from Hong Kong

Marks & Spencer is selling all its 27 stores in Hong Kong and Macau, as it focuses on turning around the fortunes of its UK business.

The retailer has taken off in Hong Kong since launching there in 1988, with demand so high that flights filled with its chilled food jet in daily.

In its results for the six months to the end of September, the high street giant noted that strong sales in Hong Kong offset poor performance in Ireland.

But it is moving to a franchise model for its overseas stores following a review of its international business, as running them can be enormously expensive.

For sale: M&S said it is moving to a franchise model for its overseas stores such as Hong Kong

Al-Futtaim has worked with the company since 1998 when it opened Dubai’s first M&S store. It now operates 72 such stores in 11 markets in Asia and the Middle East.

Paul Friston, international director at Marks and Spencer, said: ‘We have substantially reshaped our international business, which has improved profitability and positioned us for growth.

‘As one of the world’s leading retail operators, with strong logistics capabilities and local expertise, Al-Futtaim is the ideal partner for us to develop and grow our business in Hong Kong and Macau.’

Hummus, almond biscuits and fish and chips are among the most popular items in Hong Kong, with linen clothes, lingerie and footwear also selling well.

Al-Futtaim confirmed the acquisition, which will see the retailer retain involvement in the business in Hong Kong and Macau but hand over the day-to-day running.

Marks and Spencer is among a swathe of retailers set to announce its trading figures for the festive period next week.

The firm is under pressure to publish a positive update as its results for the six months to the end of November showed that profits fell 5.3 per cent to £219.1million.

At the same time it announced it would speed up the closure of 100 stores or departments selling clothes or home products, and slow openings of its Simply Food stores as families faced tighter spending.

M&S has 454 international stores including in India, Turkey, Russia, Greece, Poland and France

Marks and Spencer chief executive Steve Rowe said: ‘Our aim is to build a sustainable business which will delight our customers, provide a robust foundation for future growth and deliver value for our shareholders in the long term.

‘We have made good progress on our plans and customers are already noticing a difference, particularly in clothing and home. In the future, we will have more inspiring stores in places where customers want to shop. Internationally, we propose to cease trading in ten loss-making owned markets, but intend to continue to develop our presence through our strong franchise partners.’

M&S has 454 international stores including outlets in India, Turkey, Russia, Greece, Poland and France.

In 2016 it announced it would close all ten stores in China, after it failed to make an impact with consumers and compete with the success of the country’s ecommerce industry.

Analysts said that the tailoring of M&S’s clothing had not been adapted to suit Chinese body shapes and consumers’ style preferences. Food is considered to be the best bet at boosting sales, both overseas and at home.

But the retailer has still not managed to roll out a successful online food delivery service, putting it at a disadvantage compared to Tesco, Sainsbury’s and Ocado, which all have thriving online businesses.

Last year it revealed that it was testing a service in a bid to catch up with other retailers but it has yet to extend it to all its customers.

M&S stocks about 7,000 different products – far less than its competitors – with at least 40,000 items on sale at most Tesco stores and 30,000 at a typical large Sainsbury’s.