EXACTLY a decade ago, Sir Richard Greenbury, then chairman of Marks & Spencer, showed that he was prepared to abandon the company’s customary caution.

He announced an ambitious £2 billion expansion programme that would put the retailer “well on the way to establishing a global business”. M&S, a long-time favourite of the British high street, was determined to become a genuinely worldwide player.

Citing the global expansion of clotheswear chains Benetton and Gap and the hypermarket giant Carrefour, Keith Oates, deputy chairman of the retailer at the time, boasted: “To some extent we are breaking new ground. I don’t think there is another retailer like us, and none attempting to do what we are doing now. We are pioneers,” he declared.

Over the following few years, said Oates, M&S would expand into Europe, the Middle East, Latin America, India, China and Australia. The plan was to build on the group’s already substantial international presence, which had begun in 1974 with a store in Canada and now spanned 32 countries, including America, after a $750m deal in February 1988 to buy Brooks Brothers, the preppy men’s retailer.

The message was defiantly upbeat. But just three-and-a-half years after Greenbury outlined his radical vision, his international dream lay in tatters. By March 2001, Greenbury was gone and M&S’s group profits were flagging.

The City was angry – and the overseas business became a sacrificial lamb. Brooks Brothers was put up for sale, and 38 of M&S’s continental stores were closed down, including its Paris flagship on Boulevard Hauss-man, which had been selling scones and crumpets to the French since 1975. M&S was in retreat.

Today things are different. Undeterred by the group’s unhappy overseas experience, M&S chief executive Stuart Rose will this week roll the dice on the international gamble again. When he reveals the retailer’s half-year results, he will announce that once more M&S is pinning its hopes on foreign expansion to fuel its future growth.

It is thought the company has already drawn up ambitious internal targets for overseas sales. The sales contribution from the group’s international operations is only 7%-8% in the current financial year but the plan is for this to more than double to 20% during the next five years if the right opportunities can be found.

Under the stewardship of Carl Leaver, the former boss of the hotel group De Vere who has been appointed to head M&S’s international division, the retailer is keen to rebuild its presence in the heart of “old” Europe, China and India.

Put simply, M&S’s British operations, which are growing strongly organically at present, will be approaching maturity over the next five years. Against a backdrop of tough retailing conditions in Britain, analysts believe that M&S will need to look elsewhere for growth. That could include expanding overseas, building up new formats such as the standalone Simply Food stores and doing more in home shopping.

Matthew McEachran, retail analyst at Kaupthing is a supporter of the strategy. “You have to put the history to the back of your mind,” he said. “They have got a great format and arguably they should be able to represent themselves in foreign markets better than they ever have before.”

M&S still has 250 franchised stores overseas. It has also opened three shops in Taiwan in conjunction with a local partner, plus eight wholly-owned stores in Hong Kong and 16 in Ireland.

Analysts expect M&S to go on opening franchises, but hint that the company may eventually be tempted to buy back some of its most successful ones.

There may also be the scope to open new, wholly-owned stores; but for now, an outright acquisition of an overseas chain may prove a risk too far.

Rose has made no secret of the fact that he believes pulling out of the Continent was a mistake. “The reason we were doing so badly was we that had overextended in some areas and the mothership was not doing so well,” he said earlier this year.

George Davies, founder of M&S’s Per Una range, agrees. “Frankly, in my opinion M&S should never have come out of international – a lot of it was done to appease the City back then. If you’ve got a great brand, which M&S has, then I think there could be great possibilities overseas,” he said.

“The big difference about going international now is that we are studying the market a lot more, and I think that is what M&S has done.”

One senior executive who is familiar with M&S’s strategy said: “They have appointed Carl Leaver as head of international, who is young, aggressive and modern. But they have never succeeded internationally really, probably because they never put the resources behind it. They had one great store in Paris – but you can’t invade a country with just one army.

“But now I don’t think they have any choice. Unless they want to put their feet up after three or four years of expanding in Britain, they will have to look overseas.”

Analysts at Morgan Stanley believe that things went wrong for M&S last time because it expanded overseas when the domestic business was doing badly and because it failed to take sufficient account of the differing national tastes of continental consumers.

Morgan Stanley argues that the current management will have learnt from the mistakes of the past – they will have done more research and be better at putting their plans into action.

Meanwhile, the nature of fashion has changed; increasingly it has become a global commodity – albeit with important local differences. In theory, argue the analysts, it should be easier to internationalise than ever before.

M&S’s proposals are still at an early stage and the company is reluctant to put firm public targets on its plans.

“They are still in the age of discovery and until the troops come back and tell you what the land looks like, you can’t set definitive targets,” said one executive close to the company.

Rose believes that M&S has the potential to grow exponentially, insisting in private that there is no reason why it could not grow from an £8 billion or £9 billion business to a £12 billion, £15 billion or even £20 billion company.

But not everyone is so convinced. Richard Hyman of the retail research company Verdict said: “The idea that you can make easy money going abroad is fanciful for anybody. For the foreseeable future the fortunes of M&S will be determined by its core UK retail business.

“I’m not saying that M&S shouldn’t be looking overseas – it definitely should. But there is lower-hanging fruit in its back-yard rather than over the road.

“It still has a lot to play for in this country – particularly if it can flex its business model like Tesco has done with different sizes and types of store format.”

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