City Talk:M&S expands overseas
Marks & Spencer is to open its first supermarket in Egypt. This is part of its global expansion, which the retailer attempted a couple of decades ago and then abandoned after the group lost touch with its own UK customers and a root-and-branch reform was put in place.
M&S is now carefully re-expanding abroad after withdrawing from some of its overseas store chains in 2001. Back then, the company closed down 38 stores in Western Europe, excluding the UK, and sold off its Kings SuperMarkets and Brooks Brothers stores in the US. Sir Stuart Rose, current chairman of the group, said that the previous management's decision to pull back from overseas was a mistake.
The Egyptian store, measuring 2,600sq m, will be located in Cairo's Dandy Mega Mall. It will be opened via a franchise partnership with the Al Futtaim Group. M&S then plans to open up a flagship store in Cairo Festival City early in 2012, comprising 1,400sq m on two floors.
M&S now has 300 stores abroad, from Serbia to Singapore. It is opening stores in China and is in a joint deal with Reliance Retail to open a large number of stores in India.
The retailer is seeing its share price rise on the back of a UBS 'buy' rating, which gave 410p as its price target. The broker pushes its profit forecast higher to take into account recent strong figures, showing that food and drink sales are performing well.
Burger King loses sparkle
Retail analysts have reduced their high expectations for Burger King, previously anticipated to take pole position in the global fast food restaurant sector, after it announced falling sales hit profits in the three months to the end of June.
Profits fell by 17% to $49m in its fiscal fourth quarter against $58.9m last time. Total sales fell by 1% to $623m. Burger King is facing a market blighted by the economic malaise and appears to have failed to lure in new customers with a variety of methods to buy more of its lower-priced products. Burger King is also trying to enlarge its target market by appealing to a higher class of potential buyers by introducing 'Whopper Bars' in the US, where it hard-sells premium-priced products, as well as a scaled-down version of its original Burger King menu.
The company is also continuing its expansion outside North America. This is in stark contrast with its main rival, McDonald's, which announced a profit rise in the same period of 12% to $1.23bn as total sales rose 5%.
Bid rumours swirl around Restaurant Group
There is continued speculation that the Restaurant Group, whose share price has risen steeply to 247p in recent days, will be the target of a bid from another, bigger, restaurant group.
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