M&S plans sale-and-leaseback deals on 40 high street stores

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The Independent Online
MARKS & SPENCER, the troubled stores group, is planning to sell some of its high street shops for around pounds 250 million and double its advertising spend to over pounds 20m a year in an attempt to turn round plummeting sales.

The recently installed chief executive, Peter Salsbury, is in the middle of a complete strategic review of M&S, and a sale-and-leaseback scheme to raise pounds 250m from the sale of 40 high street sites is one of the review's most popular ides so far.

Once completed, the review will be passed to the M&S board in July. Another initiative to reverse the company's fall in revenues, the appointment of marketing director James Benfield, is already bearing fruit. Mr Benfield has decided to double the group's advertising spend from its present pounds 10m- pounds 12m.

A spokeswoman for M&S admitted yesterday that the group had been "too English and reserved" in the past.

"But we've learnt our lesson," she said. "We've seen the need to get out there and blow our own trumpet. The public need to know why they should spend money with us rather than with anyone else."

In the past M&S has concentrated on advertising store openings and extensions, along with print media and TV ads in the run-up to Christmas. This will now be extended to ads in TV, radio the print media and in-store promotions, said the spokeswoman. Exactly how the money will be spent is yet to be decided.

The property move will raise most eyebrows in the City. M&S has traditionally left sale-and-leaseback schemes to other retailers like Tesco and Sainsbury's, but now it has realised the potential value of its 290 stores, which mainly inhabit prime high street sites. It also has 22 stores inside large shopping centres.

Under the plan, M&S would sell these stores to institutional landlords such as British Land, Land Securities and the Prudential. It would then lease back the stores. Stores pencilled in for sale include those in Bath, Oxford, Belfast and York, as well as the two flagship London stores at either end of Oxford Street.

The M&S spokeswoman admitted that urgent action is needed. "The strategic review is looking at every way we run ourselves, our structures, our supplier base and so on. Everything is up for discussion."

The group is bracing itself for a gruelling results announcement in May, when it is expected to reveal one of its worst-ever annual falls in profits.

M&S shares have recovered from their five-year low of 333.5p in January to 371p at close of business on Friday.