DUBAI (Reuters) - Saudi Arabia’s Fawaz Abdulaziz Alhokair 4240.SE said on Wednesday its franchise agreement in the kingdom with British retailer Marks & Spencer (MKS.L) had ended, along with similar deals with a number of “non-performing” brands. Marks & Spencer (M&S) said in an email that its franchised stores in Saudi Arabia were transferred to Al-Futtaim Group in 2018. M&S has 15 franchised stores in Saudi Arabia. “We are focused on continuing to work with Al-Futtaim Group to develop and grow our business in Saudi Arabia,” M&S told Reuters. M&S still has a partnership with Alhokair in Armenia, Georgia and Kazakhstan, according to M&S’s website. M&S has more than 400 stores outside the United Kingdom, where it is a mainstay of shopping streets with more than 1,000 outlets. Its international business has been struggling, however, with revenues falling 14% and underlying operating profit down 6% in the year ended March 30, 2019. Alhokair also said on Wednesday it made a first-quarter net profit of 224 million riyals ($60 million), down 10.1% from the same period a year earlier. The firm, which owns franchise rights for brands including Mango, Zara and Banana Republic in the Middle East, said a decline in sales during the quarter was driven by the closure of non-performing stores and the disposal of weak brands as the group presses ahead with a “portfolio optimization strategy.”

UAE-based conglomerate Al-Futtaim is reportedly in talks with UK retail giant Marks & Spencer for the possible purchase and franchising of its business in Hong Kong and Macau. The UK's Financial Times said the talks could see Al-Futtaim become the sole franchisee for M&S in Hong Kong and Macau, adding that M&S has operated in Hong Kong since 1988 and has 27 stores in the city. Al-Futtaim has worked with M&S since it opened the British retailer’s first store in Dubai in 1998. The deal covers only the company’s retail business and its Hong Kong sourcing operations will remain wholly-owned, the FT added.

The new 230 square meter store is located in the Khurais shopping mall in Riyadh and will operate under M&S franchise partner Al Hokair. Lingerie sales currently account for over a fifth of M&S sales at its 14 full collection stores in the country and have increased 17 percent over the past year. The lingerie and beauty store opens ahead of another M&S store opening in the Mall of Dhahran in Dammam on March 17. M&S plans to open 8 more standalone stores in Saudi Arabia over the next two years, as well as two department stores in Jeddah and Riyadh this summer as part of its expansion plan to become a 'leading international retailer'. M&S also plans on introducing its lingerie and beauty concept stores in India, where it operates through its franchise partner Reliance Retail, with the first 450 square meter store set to open in Mumbai end of spring.