Marks & Spencer Said to Retreat From Paris Amid CEO’s Cost Driveby and
Retailer said to plan closure of Champs-Elysees flagship store
Outlet was opened “as part of an ego trip,” analyst says
Marks & Spencer Group Plc plans to close its flagship Paris department store on the Champs-Elysees as the new chief of the struggling U.K. retailer seeks to scale back operations and spark a revival, according to a person familiar with the matter.
The closure will be announced when Chief Executive Officer Steve Rowe updates investors on its international business Nov. 8 as part of a wider strategy review, said the person, who asked not to be identified as the plans aren’t yet public. A company representative declined to comment.
Closing the store would mark a first step by Rowe in unwinding some of the decisions of his predecessor Marc Bolland. Opening the 1,400 square-meter (15,000 square-foot) Paris store was among Bolland’s first moves after he joined in 2010.
“The Champs Elysees store cost them a fortune and was opened as part of an ego trip,” said Richard Hyman, an independent retailing analyst. “Steve Rowe is a very down to earth and pragmatic guy. He’s made it clear there are no sacred cows at M&S.”
The move comes amid a broader cost purge by the U.K.’s largest clothing retailer, which is scrapping about 525 head office jobs and reducing premium pay for non-regular hours worked by store staff. M&S had already canceled a planned opening in Amsterdam. Rowe is striving to resurrect sales in the retailer’s clothing business and grapple with ebbing demand for apparel that has caused the shares to drop 25 percent so far this year.
Profit at the company’s international unit plummeted 37 percent last year amid weak results from Europe and prospects of a recovery have been undermined by the sharp fall in sterling since the U.K. voted to leave the European Union in June.
Many investors want to see change. In a survey carried out by Sanford C. Bernstein this month, 47 percent of retail investors said they want M&S to scale back its international operations, while 20 percent favored the company withdrawing entirely.
Outside its main market of the U.K., M&S operates about 480 stores across 59 countries in Europe, Asia and the Middle East.
The retailer had exited France in 2001 under then-CEO Luc Vandevelde. Just two years ago, Bolland used an investor day in Paris to unveil a plan to open 250 new international stores and grow international earnings by 40 percent.
The Champs Elysees store is located near outlets from Nike Inc. and luxury maker Hermes, selling women’s wear, lingerie and food over three floors.
Marks & Spencer also operates food-based convenience stores in the French capital.