Marks and Spencer 2015 Annual Report Download - page 31

GOVERNANCEFINANCIAL STATEMENTS
29
ANNUAL REPORT AND FINANCIAL STATEMENTS 2015
OUR PERFORMANCE OUR BUSINESS
INTERNATIONAL
PERFORMANCE OVERVIEW
From Paris to Prague and from Cairo to
Kolkata, M&S is seen as a trusted and
progressive brand with a strong sense of
British identity. We now trade from 480 stores
and online in 59 territories across the world.
We accelerated the roll-out of our Food stores
overseas and continued to focus on our
priority markets, delivering some strong
performance in key owned markets such as
India and Hong Kong. Following the action
we took to restructure our business in the
Republic of Ireland and the Czech Republic,
we were pleased to see improvements in
profi tability in both markets.
However, sales in our International business
fell by 2.1% on a constant currency basis. The
profi tability of our franchise business was
impacted by a geopolitically turbulent year
in a number of our franchise territories. This
particularly a ected performance in Russia,
Ukraine and Turkey, where our franchise
partner was impacted by political instability
and local currency fl uctuations which resulted
in lower shipments. Elsewhere in the Middle
East region, the macroeconomic situation
has impacted consumer demand and our
franchise partners have adapted to the
challenging environment by managing their
businesses prudently and ordering less stock.
A review of our international store estate,
coupled with the adverse euro exchange rates
and tough consumer environment, resulted
in writedowns of £37.2m relating to certain
underperforming stores in Western Europe,
Ireland and China.
However, with a strong International
management team and proven overseas
partners, we remain committed to the longer-
term opportunity which we fi rmly believe
exists within our international markets.
OUR PRIORITY MARKETS
We are growing in scale and relevance in our
two key markets of India and China. In India
we opened 12 stores and our store opening
plan is on track. Sustainable economic
development, a burgeoning middle class,
and an instinctive understanding of the
M&S brand make India a fertile market for
continued expansion. In Greater China, we
opened a store in Macau and announced
our intention to open fl agships in Beijing
and Guangzhou from next year, and we will
continue to invest in our existing fl agship
store portfolio. However, following the
completion of a review, we are closing fi ve of
our smaller stores in the Shanghai region as
we refocus our emphasis on stores in the
more a uent areas. We are also seeing
signifi cant online grow th in China on our
site on the Tmall.com marketplace – sales
increased by 200% on last year. We launched
a new dedicated Kidswear store on Tmall.com
and a new clothing store on JD.com. The
success of our online expansion further
strengthens our continued commitment
to China.
INTERNATIONAL FOOD GROWTH
We have seen tremendous success from the
roll-out of our Food stores overseas. Around
the world, grocers are moving closer to the
consumer and we are tapping into that trend.
We opened six stores in Paris and four in Hong
Kong over the year, taking the total number
of international Food stores to 31. Overall
sales per square foot are in line with our best
performing Simply Food stores in the UK. Our
recipe for success is the same as in our home
market: we sell good value, delicious food
from convenient locations.
NEW OPENINGS
In May 2015, we re-entered Brussels with a
new 54,000 square foot store at Toison d’Or
and in November we will open a second store
in Macau at The Venetian Mall. We have an
exciting pipeline of openings in the Middle
East. In February we opened our largest
international store in Kuwait. The View is a
72,000 square foot fl agship that is operated
by our longstanding franchise partner
Al-Futtaim Group. The store contains our
largest Clothing, Food, Home and Beauty
o er in the region and houses a 60-seat café.
GLOBAL LANDSCAPE R
The last year has been volatile economically
and politically in a number of our territories.
However, there are two ways that our
International strategy mitigates any risk
stemming from events beyond our control.
Firstly, our geographical diversifi cation means
that we are not too exposed to any one
country. Secondly, the growing role of Food
internationally means that we e ectively
have two businesses overseas, giving us a
broader – and more stable – international
footprint.
This year, we accelerated the roll-out of our
Food stores overseas and continued to focus
on our priority markets.
PATRICK BOUSQUET-CHAVANNE EXECUTIVE DIRECTOR, MARKETING & INTERNATIONAL
1. The in-store bakery in our branch in La Défense,
Paris, takes more money than any other bakery in
our entire estate.
2. We now have fi ve standalone Lingerie & Beauty
stores in the Middle East and India.
3. A We are rolling out the Marks & Spencer
Clothes Exchange, known as Shwopping in the
UK, to our international markets following a
successful trial in our Czech Republic and Hong
Kong stores, which saw 35,000 items donated.
£1.1bn
INTERNATIONAL
REVENUE
480
INTERNATIONAL
STORES
59
TERRITORIES
OPERATING PERFORMANCE
1. 2.
-5.7% +25 NET NEW STORES
3.