BackMarks and Spencer Indian unit reports same-store sales growth of 13%
Marks and Spencer plans to open 100 stores in India by 2016, including 20 M&S lingerie and beauty stores
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Mumbai: The Indian unit of British retailer Marks and Spencer Group Plc. (M&S) posted strong sales growth in the year ended March, as it seeks to expand its presence in a market where it plans to more than double its stores in two years.
Same-store sales in India, or sales at stores that have been open at least for a year, rose 13% in the last fiscal year, said M&S, which has a partnership with Reliance Retail, the retail arm of Reliance Industries Ltd.
The company, which announced its global earnings on Tuesday, did not provide a break-up of revenue or profit earned by its Indian arm.
Asia led growth for the retailer with sales increasing close to 16% while global sales rose 6.2% and group sales were up by 2.7% to £10.3 billion.
Indian retailers such as Future Lifestyle Fashions Ltd and Shoppers Stop Ltd have been hit by an economic downturn that has caused sales growth to slow in recent times.
Same-store sales at Future Lifestyle Fashions rose 10.5% and Shoppers Stop by 8.4% in the March quarter.
M&S, which has a much smaller network than its rivals, is looking to scale up in India. In fiscal 2014, it opened 10 new stores, taking its store count to 40 across 500,000 sq. ft.
The expansion included doubling its presence in Mumbai and extending its reach to smaller cities such as Kochi, Kanpur and Surat.
“As M&S penetrates and opens more stores in the same city, close to existing locations, there will be cannibalization, and its same-store growth will stabilize at a lower rate," said Abhishek Ranganathan, vice-president at PhillipCapital India Pvt. Ltd, a securities house based in Mumbai.
M&S plans to build a leadership position in the Indian market, targeting a total of 100 stores by 2016, including 20 M&S lingerie and beauty stores, the company said in a press statement.
During the fiscal year, Shoppers Stop added 13 department stores. In the new financial year, Shoppers Stop plans to open eight new stores, taking its store count to 76; and Trent Ltd, which operates West Side, plans to open 10 outlets, taking its store count to around 90.
The availability of quality real estate is a challenge in India and M&S is struggling to find good locations as it looks at expanding, said Harminder Sahni, founder and managing director, Wazir Advisors.
Earlier this month, M&S opened its first stand-alone lingerie and beauty store in the Infinity II shopping mall in Mumbai.
M&S saw its lingerie and beauty sales increase by 38% and 26%, respectively, in the previous year, the company statement said.
“During the year, our stores in India delivered a good performance with strong double digit growth. Our exceptional quality, stylish products continue to resonate with our customers in India and the strong performance of our lingerie and beauty offers presents us with an exciting growth opportunity," Venu Nair, managing director of M&S Reliance India, said in a statement.
The overall apparel market in India grew 11% to $50 billion in fiscal 2014 from $45 billion in the previous year, led by high growth in the organized apparel sector that expanded 21%.
As India’s economic growth slumped to under 5% in the last two fiscal years, retailers increased sales durations and promotions, offering consumers a chance to buy better brands at a cheaper price. “Bigger brands from organized retail witnessed higher growth in comparison to the smaller ones," said Sahni.
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