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M&S sells Hong Kong business to franchise partner

Emerging markets

M&S sells Hong Kong business to franchise partner

Sale to Dubai conglomerate Al-Futtaim is part of turnround plan

The UK retailer has expanded its food business in Hong Kong in recent years © EPA

Marks and Spencer has sold its Hong Kong and Macau operations to Al-Futtaim, a Dubai conglomerate and franchise partner, as part of a plan to overhaul its global operations.

The British retailer, which pulled out of mainland China and announced the closure of lossmaking stores in Europe last year as part of a turnround plan under Steve Rowe, chief executive, did not disclose the price of the sale.

M&S has slowly expanded its food business in Hong Kong during the past decade, pushing back against the supermarket duopoly of Li Ka-shing’s ParknShop and the Keswick family’s Wellcome.

After entering the Hong Kong market in 1988, M&S opened its first fresh food store in 2010. This has been since expanded to 14 food outlets, out of a total of 25 shops in the city.

“When you go around the grocery scene in Hong Kong, the two local giants have a pretty cosy environment and when you look at the fresh area, the offering is not very attractive,” said Pascal Martin, a partner at OC&C, a management consultancy, and a former Asia director for M&S. “That leaves a door open for new players.”

Paul Friston, the international director for M&S, said that Al-Futtaim was the “ideal partner” to expand the business in Hong Kong and Macau further “with strong logistics capabilities and local expertise”.

Despite its growth in Hong Kong, M&S is still far behind ParknShop, part of Mr Li’s CK Hutchison group, with 295 stores, and Wellcome, part of the Keswick family’s Jardines group, with more than 280 stores. Together they control almost two-thirds of Hong Kong’s HK$53.4bn ($6.8bn) supermarket sector, according to data from Euromonitor, the research company.

Following the completion of the deal, Al-Futtaim will operate 72 stores branded as Marks and Spencer in Asia and the Middle East.

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