Marks and Spencer 1998 Annual Report Download - page 24

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Europe
ALTHOUGH TRADING CONDITIONS IN EUROPE REMAIN DIFFICULT,
THIS IS A GOOD TIME TO INVEST FOR LONG-TERM GROWTH.
years after M arks &
Spencer’s first continental store opened at
Boulevard H aussmann in Paris, we are
now accelerating our expansion into
Europe on two fronts – through our own
stores into the major economies and
through franchise partnerships into
countries where we can benefit from our
partners’ local expertise.
This strategy is on course. Despite a
disappointing year of trading – affected
both by the strength of sterling and by
continued retail recession across much of
the continent – we firmly believe Europe’s
major economies will return to strength in
the medium term. M eanwhile, the current
conditions are creating excellent
opportunities for property acquisition.
The Group currently owns 37 stores in
France, Belgium, H olland, Spain, Germany
and the Republic of Ireland. In addition
there are 53 franchise stores across 15
countries in Europe and the M iddle East.
SELECTIVE EXPANSION
When siting new stores, we seek to build
critical mass around capital cities or across
important conurbations, such as the
Rhine-Ruhr area in Germany. Having
entered Germany with our well-received
Cologne store last year, we have taken
advantage of the recession to acquire five
further sites in this, the largest retail
market in Europe.
In France, 10 of our 20 stores are in the
Paris area, which houses 20% of the
country’s population; this market remains
our most significant on the continent. We
opened one new store in Spain and plan
further expansion next year, including the
extension of our Madrid flagship store.
The Group is also expanding in Belgium,
the N etherlands and the Republic of
Ireland.
As business grows, we are better tuning
our product range to local tastes. While
much success comes from innovative
St Michael products, such as washable silk
jumpers and ethnic foods, we are actively
establishing the brand values of quality,
value and service which underpin
consistent success.
FRANCHISE GROWTH
Tough trading conditions have not
deterred our franchise partners from
sharing our long-term confidence. Three
new stores opened in Turkey during the
year, including one in the capital city
Ankara. A new store opened in Dubai, our
first in the Gulf. Footage in Greece and
Cyprus grew considerably through new
and extended stores. We sustained our
initial impact in eastern Europe by swiftly
enlarging footage in the Czech Republic
and announcing a franchise partner for
Poland.
TURNOVER £538.2m
OPERATING PROFIT £32.8m
NUMBER OF MA RKS & SPENCER STORES 37
NUMBER OF FRA NCHISE STORES 53
Twenty-three
22 OPERATIONAL REVIEW