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U.K. RETAILER PUTS KINGS UP FOR SALE ONCE AGAIN

LONDON (FNS) -- Kings Super Markets, Parsippany, N.J., is on the selling block again.Marks & Spencer here last week announced plans to pull out of the U.S. market by selling its 22-store Kings chain and its other U.S. subsidiary, Brooks Brothers, New York. The move comes less than a year after Marks & Spencer tried to sell Kings but changed its mind after it failed to get adequate offers.Marks & Spencer

LONDON (FNS) -- Kings Super Markets, Parsippany, N.J., is on the selling block again.

Marks & Spencer here last week announced plans to pull out of the U.S. market by selling its 22-store Kings chain and its other U.S. subsidiary, Brooks Brothers, New York. The move comes less than a year after Marks & Spencer tried to sell Kings but changed its mind after it failed to get adequate offers.

Marks & Spencer announced the sale of the two companies as part of a major restructuring of its international operations, which includes the closure of its business in continental Europe and the franchising of its 10 stores in Hong Kong. The moves result from Marks & Spencer's need to focus its management and financial resources on turning its struggling U.K. retail operations around.

"Brooks Brothers and Kings are both excellent businesses and have been improving their performances and are in a stronger position," Luc Vandevelde, Marks & Spencer's chairman, said at a press conference late last week. "But they are not in line with our strategy of developing Marks & Spencer as a retail format in the U.S. or anywhere else."

Marks & Spencer hopes to complete the sale of the two businesses within the next 12 months. Vandevelde acknowledged Marks & Spencer's failure to sell Kings last year but said he's confident it will be successful this time.

"A year ago we were not in the same position. We could afford to sit on the assets and wait to get the price we thought they were worth. But now the U.K. needs attention," he explained.

Robert Colvill, Marks & Spencer's finance director, told SN the retailer expects to issue prospectuses for Brooks Brothers and Kings within the next month. The sale is being handled by Morgan Stanley Dean Witter, New York. Colvill declined to reveal the prices Marks & Spencer was seeking or any potential purchasers.

Marks & Spencer bought Kings for $110 million in 1988 as part of an ambitious plan to expand into the U.S. market with its chilled and prepared foods. But the plan was never realized, and Kings remained focused on its core base in New Jersey.

"We would hope to do better than $110 million for Kings," Colvill told SN. "It's a good product but doesn't have the critical mass we need. Our business is chilled foods, and the U.S. is mainly frozen. Kings isn't of large enough scale to support a fully dedicated manufacturing base, which means we'd have to ship the foods from here, and that would be very expensive."

Kings had a 7.8% increase in operating profits to $17.9 million on an 8.8% rise in sales to $443.4 million for the 53 weeks ended April 1, 2000. This compares with operating profits of $16.6 million on sales of $407.5 million in the 52-week period a year earlier.

The proposed sale of Kings and Brooks Brothers is part of a severe scaling-back of Marks & Spencer's international ambitions, at least in the short term. The moves include the complete closure of the company's operations in continental Europe, with the loss of 3,350 jobs. Marks & Spencer moved into continental Europe in 1975 and currently operates 38 stores in France, Germany, Spain and the Benelux countries.

In addition, the retailer is converting its 10 wholly owned stores in Hong Kong into franchised stores. Marks & Spencer currently has franchised operations in 30 countries in continental Europe, the Middle East and the Far East.