UK high street bellwether M&S closing Chinese stores

Pedestrians walk past a Marks & Spencer store on the Champs Elysees avenue in Paris. [PHILIPPE WOJAZER/REUTERS]

Marks & Spencer says it plans to shut all of its 10 stores in the Chinese mainland as the emblematic UK home, food and clothing retailer continues to record heavy losses in its international business.

The Chinese stores are among 53 international branches that face closure in 10 underperforming foreign markets, as owned-store(those that are not franchises or joint ventures) international losses reached 31.5 million pounds ($39 million) in 2015-16 and total international operating profits were down 39.6 percent to 55.8 million pounds.

In its half-year sales report issued on Tuesday, the company revealed that sales grew by 0.3 percent at M&S.com, fell 0.9 percent in the food section, and that the worst losses were reported in the clothing division, where they fell 5.9 percent.

"Internationally, we propose to cease trading in 10 loss-making owned-markets, but intend to continue to develop our presence through our strong franchise partners," Steve Rowe, M&S CEO, said."These are tough decisions, but vital to building a future."

M&S opened its first store in the Chinese mainland in Shanghai in 2008, when the long-term plan was to open 50 stores in China. It joined Alibaba's online site Tmall. com in 2012. The company's online sales grew by 200 percent between 2014 and 2015, and in 2014 M&S identified China as key to its international plans.

In March 2015, however, M&S announced plans to close five of 15 branches in the Chinese mainland as brick-and-mortar stores struggled to perform.

The company plans to continue operation of profitable owned-stores in the Czech Republic, the Republic of Ireland and China's Hong Kong Special Administrative Region, where the company enjoys "strong brand awareness, established store estates and loyal customers".

The company's flagging clothing and home divisions have also led to a restructuring of its domestic estate in the UK, where the company plans to open 200 new food locations by the end of 2018-19, but remove clothing and home spaces from 60 locations.