Marks & Spencer set to expand in Central and Eastern Europe
Spencer has entered into a joint venture with COMS to expand its
presence in key Central and Eastern European markets.
The company, which focuses on food, clothing, personal care and household goods, is attempting to extend its footing overseas, having met with mixed results when it tried to expand its overseas operations during the course of the 1990s. "There is a great opportunity to open many more Marks & Spencer stores across Central and Eastern Europe and grow a presence in the region," said Carl Leaver, director of international business for Marks and Spencer. "The Marks and Spencer brand is already well recognised in the Czech Republic and there is increasing demand for good quality products in markets like Slovakia." Expansion will be powered by franchise agreement Marks & Spencer says the partnership will take the form of a franchise, in which the company will maintain a controlling stake. This means that the company will buy a 51 per cent stake in COMS for €13.6m, a transaction that will be dependent on business performance and the achievement of agreed targets. COMS currently operates 13 Marks & Spencer stores in Czech Republic, Slovakia, Latvia and Lithuania - which are all amongst the most developed economies and retail landscapes in the region. The franchise agreement means that Marks & Spencer can race ahead with plans to open up a further 30 stores in these markets during the course of the next few years and enter the Estonian market for the first time. The company says that the decision falls in line with its plan to invest in its existing franchise partners as a means of expanding its international operation through the most efficient and cost-effective means. M&S chases significant international growth In 2007 Marks & Spencer reported that sales for its clothing and home division, which incorporates personal care, were up 9.6 per cent to £4bn, while its international sales rose 16.8 per cent to reach £610m. Currently the company manufactures and supplies over 1,000 different toiletry, colour cosmetics, hair care and skin care products worldwide. In 2006 the company reported that it had streamlined its colour cosmetics business by switching to a single supplier, Yorkshire-based Peter Black in a move that aimed to reverse a downward trend in sales for the category. As other key markets for personal care products in Europe remain relatively stagnant, increasingly manufacturers and retailers are turning to Central and European to boost their longer-term prospects for growth. In line with this, Beiersdorf announced last year that it would be focusing on the rapidly developing markets of Romania and Bulgaria as a means of raising awareness of its brands to develop future sales potential.
