M&S announces major store shake-up

Marks & Spencer announced the first major shake-up of its store portfolio for almost a decade today as it seeks to build on recent successes.

The retailer said it plans to increase its trading space in the UK by as much as a fifth over the next five years.

The expansion will include new out-of-town stores and a higher presence in retail parks, as well as improvements, closures and relocations in city and town centres.

The programme is the latest part of a turn-around strategy by chief executive Stuart Rose in his efforts to tempt customers back into stores that for years hae been seen as dreary and a turn-off to customers.

Unveiling the results of the property review, Mr Rose said: “We have one of the strongest and most recognised brands in the UK, which needs a powerful showcase.”

The group at present has 507 stores in the UK, and has already modernised a third of its older sites, which Mr Rose today said “delivered strong returns” in the first half of the year.

He pledged another £800m (€1.2bn) of investment over the next year to update another third by Christmas 2007.

Among the major city-centre projects is the refurbishment and expansion of the Liverpool store, which will see its size increase by more than a third to 120,300 square feet, in time for the city’s European Capital of Culture year in 2008.

The Belfast store is also being enlarged and modernised, with its floor space increasing by more than 10% by October next year.

In Edinburgh, M&S is closing one of its two Princess Street stores and expanding and improving the other as it looks to bring all its ranges under one roof over the next 12 months.

“This is something that our customers have been asking for,” said a company spokeswoman. “The shopping experience will be much nicer for customers.”

M&S has reassured customers that old stores will not be closed until the new ones have opened.

M&S has 78 “major” city-centre stores and a further 200 on the high street in the UK. It also has 16 outlets in retail parks and a further 27 out of town.

The company said it was “actively looking for opportunities” to expand the number of stores in retail parks and out of town, at the same time as relocating and refurbishing its town-centre estate.

Of its current out-of-town sites, it is modernising and extending the London Colney store in Hertfordshire as well as opening a 120-seat café.

M&S has 186 upmarket Simply Food stores, including 49 franchises that it does not own. M&S today said it hopes to open 200 Simply Food stores on petrol station forecourts after a successful trial with BP.

Investec Securities analyst Mark Charnock noted the strong sales performance in the first half of the year from the newly refurbished stores.

“This underpins the group’s confident statement that it intends to add 15% to 20% to UK trading space over the next five years,” he said. “The group is moving into growth mode from recovery.”

The last major property review, by then chief executive Peter Salsbury, was in 1999, and resulted in the sale of a number of freeholds, which the company leased back.

It coincided with a dramatic reversal in fortunes at M&S as full-year profits slumped from more than £1bn (€1.5bn) in 1997 and 1999 to just £145.5m (€217.2m) in 2001, although this was largely down to the clothes on offer.

M&S today said the new scheme would not involve the sale and leaseback of any properties.