By IANS
London : After indifferent sales at home, British retail outlet Marks & Spencer (M&S) will invest 1.1 billion pounds (about Rs.91 billion) in India and China next year, the company said Tuesday.
It is expected to announce a joint venture partner in India.
“To get to where we are going, we have to make investments. If I said we are cutting back on capital expenditure, you would say the business is going nowhere,” M&S chief executive Stuart Rose said.
“These decisions reflect our confidence in the strength and future prospects of the business,” he added.
“Whilst the short-term economic outlook remains uncertain, the actions we have taken to reposition and revitalise M&S over the past three years put us in a good position to outperform.”
The aim is to double the group’s international revenues over the next five years.
The retailer will open a wholly owned store in China before the end of the financial year.
“India is an equally exciting long-term opportunity and a market where we have been trading for six years. We are looking to accelerate the pace of growth in this fast developing economy over the next few years,” Rose said.
He described performance in the three months to Sep 29 as “creditable”, although underlying sales grew by only 1.2 percent, below the two percent analysts had reportedly hoped for and the worst growth for nine quarters.
In the six months to Sep 29, gross margins remained at the same levels as a year before. They were affected by increased food wastage as M&S struggled to cope with this summer’s unpredictable weather swings, and higher discounting on clothing during the cold weather.
However, first-half profits rose by 11.5 percent to £451.8 million, ahead of expectations and the company is on track to top £1 billion in full-year profits for the first time since 1998.
In Britain, the company expects to add 15 to 20 percent more selling space in the next three to four years, while its first Chinese store is expected to open in Shanghai next year. It planned to open two or three stores fairly quickly to test the market.