M&S Overseas Expansion is a Template For UK plc
Today's Marks & Spencer final results weren't exactly a red letter day for the company. Pre-tax profits have taken a nose-dive, with a resulting cut in share dividends. Overall sales were slightly up, but a fall of 1.7 per cent in UK sales for the 52 weeks to 28 March 2009 was offset by sales growth in overseas markets of 25.9 per cent for the same period.
Not slow on the uptake, the retailer has pledged to double its overseas business, to up to 20 per cent of overall sales by 2012. Unfortunately these plans have been hampered by the departure of Carl Leaver, the man expected to head up overseas expansion.
Leaver, at the moment director of international, ecommerce and home, was about to see his role significantly pared down and so decided to seek alternative employment. This will be a blow to the retailer as he was respected internally and feted by pundits to succeed executive chairman Sir Stuart Rose in 2011.
According to an M&S spokeswoman, a replacement for Leaver is being sought and will be appointed in due course.
M&S's commitment to expanding overseas into developing markets highlights a trend amongst UK companies who are finding domestic sales and markets in developed economies both contracting. It does beg the question of whether the retailer has the culture to shift one fifth of its revenue coming in from other countries. M&S is an old-school, establishment UK plc, so it will be interesting to see how it adapts to a more global view in terms of its management skillset -- it has had problems expanding overseas in the past.
Another pledge within the yearly report is a change programme dubbed '2020 -- Doing the right thing', chaired by financial head Ian Dyson. Hopefully, this £900, three-year programme will address the way the management culture needs to be steered to cope with, among other things, increasing international sales.
If M&S gets this right, it will be a good example to other companies looking to expand overseas. If it doesn't, it could well be the undoing of Rose and Dyson.