M&S axes sale plan for US business

Marks & Spencer today pulled plans to sell its North American supermarkets arm Kings after failing to attract the right price for the business.

The UK retail giant first signalled in 2001 that it wanted to offload the 27-store chain as part of plans to focus on its core domestic market.

But M&S chief executive Roger Holmes said discussions to sell Kings, which generated turnover of £290.1m (€413m) in the year to March 31, were off.

He explained: “In the current US climate it has not been possible for interested parties to raise sufficient funds to purchase Kings at what we perceive to be a fair price.”

Mr Holmes said Kings remained outside of the blue-chip company’s core strategy, but that it would still look to maximise its value by working with the division’s senior managers to improve its financial performance.

When Kings was put up for sale in 2001, analysts estimated that the operation could fetch in the region of £185m (€263m).

The plans to sell Kings in 2001 were announced as part of a wide-ranging review designed to drag the ailing retailer back to its feet.

The strategy, which at the time was expected to cost more than 4,000 jobs, also included the closure of 38 stores on the continent and the shutting of a mail order catalogue business in the UK.

Since then fortunes have dramatically improved at M&S.

The Kings food chain, which focuses on the upper end of the market, was founded in 1936 by the Bildner family and subsequently acquired by M&S in 1988.

Kings has its headquarters in Parsippanny, New Jersey and operates stores ranging in size from 6,000 to 27,000 square feet. It has 2,500 full and part-time employees.

However, the business has struggled in the difficult retail climate, with turnover down from 2002 and operating profits also down.