Marks & Spencer International Director Paul Friston said in a statement that the “substantially reshaped” international business was intended to continue improvements in profitability and growth.
The UAE-based franchiser, Al-Futtaim, runs 72 M&S stores across 11 Asian and Middle Eastern markets, according to Reuters, and the deal will see the company acquire 27 stores. Amid increasing financial headwinds, the company has said it would pursue extending its joint ventures and franchise partnerships .
The sale follows comments made by the recently appointed M&S chairman, Archie Norman, in November, in which he criticised the business for “drifting, underfulfilling its customer promise not for five years, not 10 years but 15 years and maybe beyond”.
Norman’s comments followed confirmation from the company that it was to accelerate plans to shut underperforming clothes departments and would be slowing the expansion of its Simply Food chain. Such a plan would see 10% of its total £3.4bn UK running costs cut.
In 2016, the company had begun to address some of its underperformance issues with a view to modernisation. In the sweeping strategic review, Steve Rowe, CEO, jettisoned the idea of turning M&S into a global retail group, as he shut almost all overseas stores, including the Champs-Élysées store which had served as the company’s French flagship.
Though analysts termed the move a step in the right direction, its strategic effectiveness would not become apparent for a number of years. Jamie Merriman, an analyst at Bernstein told the FT that for most retailers, rising to the challenge of reducing stores by 10% while keeping sales flat would be “a tall order.”
Sourced from Marks & Spencer, Reuters, The Guardian, Financial Times; additional content by WARC staff