Al-Futtaim takes control of Marks & Spencer Hong Kong, Macau

Marks-Spencer-MacaoMarks & Spencer has confirmed the sale and franchise of its retail business in Hong Kong and Macau to its long-established franchise partner Al-Futtaim.

The two companies all but confirmed the sale in August  and settlement took place on December 30.

Al-Futtaim is now the sole franchisee for Marks & Spencer Hong Kong and Macau, but the deal does not extend to the mainland where M&S has a presence on Tmall, having closed its department stores there.

The two companies have a partnership dating back to 1998 when Al-Futtaim opened Dubai’s first M&S store in the UAE.

The addition of 27 Marks & Spencer Hong Kong and Macau stores takes Al-Futtaim’s M&S network to 72 shops in 11 markets in Asia and the Middle East.

“We have substantially reshaped our International business, which has improved profitability and positioned us for growth,” observed Paul Friston, Marks & Spencer’s international director in a statement confirming the sale.

“As one of the world’s leading retail operators, with strong logistics capabilities and local expertise, Al-Futtaim is the ideal partner for us to develop and grow our business in Hong Kong and Macau.”

Stephen Rayfield, VP of M&S and sports & lifestyle with Al-Futtaim said the company is looking forward to “enriching our customers’ lives and aspirations through the provision of quality products and services in Hong Kong and Macau”.

Pascal Martin, partner with OC&C Strategy Consultants, said the decision to sell and franchise the Marks & Spencer Hong Kong business is consistent with the shift to an asset-light business model that the UK company has adopted for its international business.

“It did not make sense to support only Hong-Kong and Macau as directly operated international businesses after having pulled out from all other direct markets, such as China and France. By selling its Hong Kong and Macau business to Al-Futtaim, M&S can also raise cash to continue to invest in its core, including product quality, the UK market and e-commerce.”

At the same time, Al-Futtaim has a strong track record in operating M&S stores in many other markets and a solid investment capacity to continue to expand the M&S international store network, said Martin.

“Another key factor is that Al-Futtaim’s M&S business is led by ex-M&S’ senior executive, Stephen Rayfield, who knows the business inside-out and can fully optimise daily operations between Al-Futtaim and M&S.”

M&S now has a simple homogeneous international business: all wholesale to local partners, with the exception of a joint venture in India with Reliance.

“The brand will be able to leverage Al-Futtaim’s strong investment capacity to accelerate the International expansion. Al-Futtaim can benefit from adding a strong profitable business (HK and Macau) to its already strong international M&S portfolio. They may be able to exert more control on M&S Asia logistics network to achieve better integration across Singapore, Malaysia, Hong Kong and Macau. Al-Futtaim will likely have increased negotiation power with M&S on product, store format, pricing and more,” said Martin.

This story first appeared on sister site, Inside Retail Asia.

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