British retailer Marks & Spencer (M&S) will enter a strategic partnership with competitor Roches Stores in two Irish supermarkets as part of a deal announced yesterday.
Roches Stores plans to transfer its remaining four supermarkets to Marks & Spencer and independent SuperValu franchisee Caulfield McCarthy.
The company said the move was "consistent with Roches Stores' strategic focus on its fashion and homewares business in recent years".
Roches operates the four supermarkets, one in Blackrock,Dublin, two in Cork and one in Galway, as SuperValu franchises. It will close Blackrock and Galway in March, and both will reopen as M&S outlets in June. They will sell both food and clothes.
Caulfield McCarthy will take over the franchises in the Patrick Street and Wilton stores in Cork from May. Both it and M&S intend to rehire all staff in the four shops. Roches will lease the premises to both businesses.
The transfers will be a significant expansion for Caulfield McCarthy. The group estimated yesterday that it would bring its sales up to €140 million, a 40 per cent increase on its current level.
Caulfield already operates seven other supermarkets in the south and east of the State under the SuperValu brand. This makes it one of the biggest partners of Musgrave, which owns the SuperValu franchise.
The Roches Stores announcement means Musgrave is losing two franchises in key sites. Mr Donal Horgan, managing director of the division responsible for the Musgrave SuperValu Centra franchise network acknowledged the loss in a statement yesterday.
However, he said Musgrave had already replaced the business by opening new stores. "SuperValu will have some 35 stores in Dublin by the end of 2005, five new stores were brought on line in 2004," he said.
Musgrave's franchisees spent a total of €65 million opening 14 new stores around the State in 2004. A statement last week said that it planned to open at another 10 locations in 2005.
Roches Stores began exiting the supermarket business last year, closing outlets in two Dublin branches, Henry Street and Blanchardstown.
The Roches Stores business is made up of a series of unlimited companies and does not publish accounts. However, sources estimate its food sales at between €60 million and €70 million a year. The two Cork stores account for the lion's share.
In 1998, it announced the partnership with SuperValu, ending speculation that it was going to sell the business to a British multiple. At that time, its food sales were estimated at £100 million.
