Retail properties

Marks & Spencer in talks with Al-Futtaim to sell its Hong Kong, Macau businesses

Retailer says it would focus on established franchise partnerships and operate fewer stores

PUBLISHED : Wednesday, 30 August, 2017, 6:40pm
UPDATED : Wednesday, 30 August, 2017, 7:16pm

British multinational retailer Marks & Spencer (M&S) said on Wednesday that it had begun talks with one of its long-time partners Al-Futtaim, to sell the franchise of its retail business in Hong Kong and Macau, a move it expects to create a more “profitable and customer-centric International business”.

The talks followed the British retailer’s strategic review of its international business in November last year that led to the closure of numerous stores in 10 international markets including China. It would also increase its focus on the established franchise and joint venture partnerships and operate fewer stores.

The discussions between the two companies were expected to be completed within several months, but it would be business as usual for M&S’s 27 Hong Kong stores and two in Macau, the company said in a statement.

Al-Futtaim, a key partner to M&S in Asia and the Middle East since 1998, currently operates 43 stores in the Middle East, Singapore and Malaysia.

“With significant scale and retail expertise in the region, we are looking forward to discussing the potential extension of our partnership to Hong Kong and Macau as we continue to grow and develop our business together,” said Paul Friston, M&S’ international director.

UK retailer Marks & Spencer withdraws from mainland China market

Hong Kong and Macau are among “Marks & Spencer’s most successful and important international markets”, said Stephen Rayfield, senior managing director of fashion & lifestyle division at Al-Futtaim.

Analysts say the shift to a greater focus on the franchise model for its international markets would benefit M&S.

“The move could help the company to adopt a ‘light’ business model for their operations in international markets including China,” said Mariana Kou, head of China education and Hong Kong consumers at CLSA. “It can also help it to focus on better building its brand image and develop its food products.”

The retailer had taken a hit from its retreat from China in 2016, where 10 stores were shuttered.

Some analysts attributed its failed China business to its “unclear branding positioning”, but added that the company’s shift to focus on the food business was a good move.

Established in 1884, the London-headquartered company has 979 stores in the UK and 454 stores in 55 international markets.