Marks & Spencer Banks on Growth Online, Overseas

123jump.com Staff
13 Oct, 2009
New York City

Marks & Spencer struggled to convince investors as it outlined its growth plan for the next ten years. The company plans to transform to multi-channel retailer and experience faster growth at international locations.

[R]6:00 PM London – Marks & Spencer struggled to convince investors as it outlined its growth plan for the next ten years. The company plans to transform to multi-channel retailer and experience faster growth at international locations.[/R]

The food and clothing apparel retailer Marks & Spencer at a presentation to investors struggled to convince investors that it can regain its growth footing as it diversifies to multichannel retailer and sharpens its focus to international markets.

Marks & Spencer dropped 4.3% to 346.9 pence after the company looks for new business in faster growing economies of China, India and Eastern Europe and look for online food store in the UK.

The company in a presentation to investors said that it plans to become multi channel focused and look to international markets for expansion.

The retailer plans to save £150 million a year through warehouse consolidation and plans to open a dedicated warehouse for its online food store in Midlands.

The retailer operates 14 stores in India and 76 stores in China and plans to add at least 50 new stores in India in the next five years.

The retailer in a presentation to investors also estimated that 2009 selling square footage is expected to flat at Marks & Spencer. Waitrose is expected to increase its retail space by 6% and Tesco by 5.8%.

The retailer also estimated in the latest 24 weeks ending in the first week in September at the eight leading retailers in UK, sales increase are driven by price increases with an average of 5%. Marks & Spencer prices are flat unit sales increase is 1.3%.

Sales growth has been flat at retailer whereas the sales at eight leading chains are ranging between 5% and 7%. The flat sales at the retailer have been a concern among investors especially when the sales at other grocery chains are rising.

Nearly 12 million households shop at Marks & Spencer, trailing the 21.7 million households shopping at Tesco and 16.9 million at Sainsbury.

The company plans to spend £1 billion in IT related capital expenditure by fiscal 2015 and save £250 million in the period of which £30 million savings have already been realized.

The company estimated that retail sales are expected to increase to £307 billion by 2015 from £271 billion in 2009. In store sales are expected to decline to £204 billion from £212 billion and online or direct sales are expected to increase to £39 billion from £21 billion in the period.