Marks & Spencer to open stores in Germany

BY NIGEL COPE

Marks & Spencer is to develop a chain of stores in Germany and is investigating the possibility of expanding into China.

The group is also considering opportunities in Italy but has decided against an assault on the Japanese market. M&S said yesterday that the first German store was likely to be in Hamburg, with others planned for big cities, including those in the former East Germany.

"We've researched the market carefully and believe there is room for our mix of quality, value and service," a spokesman said.

The company has been operating stores in France and Belgium for nearly 20 years. It also has stores in Spain, the Netherlands, Hong Kong and Canada, where it has 49 outlets.

M&S has some representation in the former Eastern bloc, with franchise stores in Budapest and Prague.

Keith Oates, M&S deputy chairman, said: "Development will follow the step by step formula which has been so successful for us in other countries. The only constraint will be our ability to secure prime sites at the right prices."

Finding retail sites in Germany is notoriously difficult and very few British store groups have traded successfully there. Laura Ashley has some German outlets and Biba, the fashion chain, traded with some success during the 1980s. Yesterday Sears, the Selfridges and Freemans catalogue group, pulled out of the German market after sustaining long-term losses in a shoe shop joint venture.

Robert Snaife, retail analyst at Socit Gnrale Strauss Turnbull, said: "Germany is a difficult market and it can take a long time to break through. But Marks & Spencer has the resources to play a long game."

M&S has proved successful on the Continent, where its stores yielded a profit of £27m on sales of £247m last year.

In the Far East, M&S has submitted an application to establish an office in Shanghai which will monitor the Chinese market and open discussions with government and local businesses.

M&S has had a team of managers looking at the Japanese market. Yesterday it said it had decided not to go ahead with stores there but did not rule out Japanese stores in the future.

Sears yesterday sold its share in its German shoe shop joint venture, Sears Andre Retail Group, to its French partner, Group Andre. In return Sears is buying from Group Andre the half of the Benelux joint venture it does not already own.

Sears said the German shops had been loss-making for some time but the Benelux shops, which trade under the Dolcis, Manfield and Invito names, made profits of £5m last year.