Marks and Spencer 2006 Annual Report Download - page 17

Marks and Spencer Group plc
We are currently reviewing the trial of
‘Simply Food’ in eight BP forecourts, which
we launched in autumn 2005, and one
which we opened after the year end.
The market for M&S food is potentially
much wider. In seven stores we tested new
formats including ‘Hot Food to Go’, like hot
wraps and soups, and in four stores we
introduced new bakeries, selling fresh crusty
bread and first class patisseries and
delicatessens where customers can sit and
eat breakfast, brunch, a light lunch or
supper. These ideas help bring theatre and
excitement to our stores.
Looking ahead
We will continue to provide innovative food
of exceptional quality in 2006/07. Healthy
eating will remain a priority for us.
We plan to increase our ‘Eat Well’ products,
extend our additive-free ‘Marks & Spencer
Cook!’ range and continue to reduce salt
and remove hydrogenated fats from our
food. We will also continue to highlight the
special quality of our food and its
provenance.
Building on our popularity at Christmas and
other key times of the year, we will seek to
become the preferred destination for
personal celebrations like birthdays,
weddings and anniversaries.
We will open more ‘Simply Food’ stores and
extend the trial of new formats, like our ‘Eat
Over Deli’ bars, bringing our food to a wider
audience. Later this year we will open our
first stand-alone restaurant at our Newcastle
store, where customers will be able to dine
out on a range of our food.
International
Our International business
contributed 9.1% to the
Group’s pre-tax profits.
Comprising wholly-owned stores as well as franchise stores around
the world, our International division continues to flourish. In
2005/06, it generated a turnover of £522.7m (last year £455.8m)
and an operating profit of £65.6m (last year £60.4m). As part of
our plan to refocus the business we agreed the sale of our US
supermarket chain, Kings Super Markets, for £35.4m ($61.5m)
in March 2006.
Franchise
We operate 198 franchise stores in 30 territories around the world.
During the year, 22 stores opened including two in Moscow, an
additional four in the Czech Republic and three more in India. We
have also closed a number of stores in the period, either to move
to better sites or to concentrate on larger, more profitable stores.
Total space grew from 1.30 million sq ft to 1.43 million sq ft.
We see considerable scope to increase the number of franchise
stores in our current territories and to enter new ones. We opened in
Switzerland in April 2006, and have plans to open in Ukraine and
Latvia, as well as to expand our Russian presence to St Petersburg,
in 2006/07. Franchise stores give us the opportunity to expand
internationally without significant capital cost. By continuing to work
with trusted partners, we benefit from both their local knowledge
and increased economies of scale.
Wholly-owned
We have eight wholly-owned stores in Hong Kong and this
continues to be an attractive and profitable market for us.
Competition for good sites remains tough and rents are high, but
we are keen to expand our presence there.
Our stores in the Republic of Ireland are thriving. In 2005/06, we
opened two stores in Blackrock and Galway and in April 2006 we
opened another in Newbridge Retail Park, west of Dublin. We will
open in Drogheda in summer 2006, bringing the number of stores
there to 13.
8 STORES
HONG KONG
11 STORES
REPUBLIC OF IRELAND 45 STORES
CENTRAL
EUROPE
65 STORES
IN ASIA PACIFIC
1 STORE
BERMUDA
9 STORES
CENTRAL ASIA
60 STORES
EUROPE
18 STORES
MIDDLE EAST
KEY
WHOLLY-OWNED STORES
FRANCHISED STORES
www.marksandspencer.com/international2006 15