Marks and Spencer 2010 Annual Report Download - page 37

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Operating & financial review
Governance p50
33To find out more, visit marksandspencer.com/annualreport2010
Brand & marketplace p20
Performance & KPIs p14
Overview p01
Financial statements p78
SERVICE
Above: Isha Tambe is store manager of our
Mumbai store – our first store in India with partners
Reliance Retail, which opened in April 2009.
The potential in China is similar to that of
India, with a large population and economic
(GDP) growth at 8.7%. This year we have
focused on adapting our product to suit the
needs of the local market. For example, we
have introduced size 6 and size 4 across
womenswear to cater for smaller size
requirements and are developing ‘Asian fit’
bras for the market. We will continue to
improve our product tailoring, through
increased local sourcing.
Our Hong Kong stores have delivered a
strong performance, despite the economic
pressures in the region. Following the
successful Food to Go trial, in May 2010
we opened our first standalone food store
in Hong Kong. The new store offers a
comprehensive range of chilled products, a
first for M&S in the international market. We
now have 11 stores in the region and plan to
open a further store later in 2010.
Republic of Ireland
The economic environment in Republic of
Ireland continued to be challenging.
However, our pricing remains competitive
and we responded to the changes in alcohol
duty and VAT, offering an immediate
reduction to our customers ahead of our
competitors.
FRANCHISING
Our franchise operations now account for
around 31% of total International sales.
With Fiba, our franchise partner in
Turkey, the Ukraine and Russia, we have
had a very good year and have opened
eight new stores.
Al-Futtaim, our partner in the Gulf, has had
a tougher year. Our stores there performed
strongly until the autumn, when the Dubai
economy faltered. However, we remain
confident about this market – there is an
affluent customer base and we have a
strong property portfolio, including a number
of larger stores, enabling us to showcase
more of the product range.
We have a long established franchise
business in The Channel Islands, with the
rest of our franchise business located in
a variety of locations, including Tenerife,
Marbella, Gibraltar, Bermuda, Cyprus
and Hungary.
Looking ahead
We want to build a platform for long-term
growth and to do this we know we must
continue our international expansion at a
sensible pace. Emerging markets represent
a great opportunity for M&S and we will
focus on creating sustainable businesses
in these countries. We will ensure our
products are right, editing ranges to suit our
markets and responding to the unique price
architecture of each country, locally sourcing
wherever possible. We will continue to
grow our property footprint, increasing
the average square footage of our stores.
All of this will be underpinned by an efficient
operating model.
Eastern Europe
In 2008 we bought controlling stakes in our
Czech and Greek businesses and since then
we have strengthened the management
teams on the ground to create the right
mixture of local and M&S knowledge.
Over the last 12 months our business
with our Czech partner has grown, opening
10 new stores across the Czech group in
Poland, Slovakia and Estonia, taking the
total number to 36. Over the next year, we
will continue to develop our presence in
these regions, focusing on key cities in the
Czech Republic, Poland and The Baltics.
Greece has been hit hard by the
economic downturn. But we continue to
work closely with our partner Marinopoulos
Group to keep stocks tight and manage
the business, to give us more flexibility in
this environment.
WHOLLY-OWNED
The Far East
In 2008/09 we opened our first store in
Shanghai. Since its opening, we have
developed our knowledge of local trading
and put in place an infrastructure to support
sustainable growth in this market, including
a new warehouse and a strong head office
team. In the short-term, we will focus on
developing our presence in Shanghai and
plan to open a second store in the city in
summer 2010, with an aim of opening a
third by the end of the 2010/11.
Southern and
Eastern Europe
160 stores
Far East
74 stores
Middle East
23 stores
Mediterranean and Islands
23 stores
Other: Bermuda
1store
Indian subcontinent
16 stores
Our International operations
A net total of 34 new stores in 2009/10.
Republic of Ireland
and Channel Islands
30 stores