Retailer Marks & Spencer said it will aggressively step up investment in its core UK business, online and overseas, as new boss Marc Bolland set out his stall alongside a 17 per cent rise in first-half profit.
The Dutchman, enticed from grocer Morrison's by a £15 million pay deal, said he would spend an extra £850-900 million over three years to lift revenue to £11.5-£12.5 billion by 2013-14 from £9.3 billion in 2009-10.
"We'll make the UK (business) more competitive but also lay the foundations for international and multi-channel to become in three to five years time an international multi-channel retailer," Bolland told reporters.
About two-thirds of the additional investment will be allocated to the clothing and food group's British shops, with plans to develop the M&S brand, step up store openings, improve the in-store environment, boost product availability, raise sales of homewares and bolster own-brand products.
A further £150 million will be spent on the group's online business, with a goal to double revenue by 2013-14, and a similar amount will go on expanding overseas, with India and the Shanghai region of China the top two priority markets.
Mr Bolland said the firm was looking at Western Europe but had no current plans to re-acquire stores in markets, such as France and Spain, it retreated from in 2001.
"We believe that the £300 million extra capex for three years running is a very balanced programme and therefore it's doable," said the CEO.
The firm plans to fund the programme from existing cash flows, while remaining committed to maintaining an investment grade credit rating and a progressive dividend policy.
Singer analyst Matthew McEachran said the extra capital spending could unnerve some investors, particularly as the group had only recently spent money on refurbishing UK stores.
Reuters