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Sep 25, 2008
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M&S to open first mainland China store on Oct. 2

By
Reuters
Published
Sep 25, 2008

LONDON, Sept 25 (Reuters) - Marks & Spencer will open its first store in mainland China on Oct. 2, the same day as a keenly-awaited trading update, in the latest move by an international retailer into the world's most populous country.

The British clothing, food and homewares group said the 45,000-square-feet store on Nanjing Road West, Shanghai's premier shopping street, would be its biggest so far in Asia.

The opening underscores Chairman Stuart Rose's determination to take Marks and Spencer (M&S) back onto the international stage, despite growing problems at home.

Global retailers like U.S. group Wal-Mart and France's Carrefour have flocked to China in a bid to tap into its surging economic growth and growing middle class.

Expansion has not been without problems. Richemont , the world's second-biggest luxury goods group, and Kingfisher , Europe's biggest home improvements retailer, have both closed stores after rapid growth and stiff competition.

But M&S already has experience of mainland Chinese shoppers, as many travel to its nine stores in Hong Kong.

Formerly occupied by the Wings department store, the Shanghai site has been given a complete makeover and will sell M&S's traditional mix of women's, men's and children's clothes, as well as homewares and food, over four floors.

Like its Hong Kong stores, the Shanghai outlet is wholly-owned by the company. M&S has not said when or where it plans to open more shops in mainland China. However, it is due to open another one in Hong Kong in the near future.

M&S first began expanding outside the UK back in the 1970s. But it retrenched earlier this decade, selling its operations in the United States and closing down company-owned stores in western Europe to focus on boosting sales at home.

In November 2007 it announced a fresh push abroad, setting a target for its international business to account for 15 to 20 percent of group sales within the next few years. The proportion was just under 8 percent in the year ended March.

The group has since taken stakes in partners in Greece and the Balkans, central and eastern Europe, and also announced an agreement with Reliance Retail to expand in India.

But while most analysts have applauded the hands-on international strategy, some have questioned whether M&S should be expanding while trading conditions at home are deteriorating.

M&S issued a profit warning in July, at which point it said it would stick with its capital spending plans.

The group is expected to report on Oct. 2 that underlying UK sales in both its food and clothing businesses remain well into negative territory. (Reporting by Mark Potter; Editing by Toby Chopra)

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