Carburton Street, London -- The late eighties and early nineties was a period when the stock market fell in love with Mark & Spencer (LSE: MKS). It was period when Rayner reigned and M&S could do no wrong. Its staunch policy to buy British struck a chord with the British people and M&S wanted to export its culture to shores afar -- the British Isles just wasn't big enough for the master of UK high street retailing. Derek Rayner, the then chairman, was on a mission to take M&S global and he wanted to make his mark in the US.
The company's earlier forays into Canada should have been a clarion call to the M&S managers that consumers across the Atlantic were vastly different to their UK shopper. But undeterred by its underperforming Canadian venture, M&S made ploughed ahead with its acquisition of Brooks Brothers from the retailing entrepreneur Robert Campeau in 1988. For M&S it was a dream deal but little did it know that its American aspirations would soon turn into a nightmare. To clinch the deal, M&S paid $750m, which many thought was way over the top, to get a foothold in the US market. Brooks had class and it had a well-respected brand but its core customers, the upmarket preppies, were a dying breed and definitely not the growth sector that M&S was led to believe. But M&S's hubris clouded its ability to think rationally and its inexperience in the field of corporate acquisitions was well exploited by the street savvy financial dealmakers.
But today M&S drew a line under its US retailing debacle. It has sold the underperforming Brooks Brothers to the privately owned Retail Brand Alliance for $225m. The deal, which is subject to regulatory approval, will see the asset and staff transferred over to the buyer by the end of the financial year. Some sectors of the market are pooh-poohing the deal and believe that M&S could have eked out a better offer. But today's disposal is yet another indication that chairman and chief executive Luc Vandevelde is keen to get on with the job in hand, namely to get M&S focussed on its UK operations, without unnecessary distractions.
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