Marks goes to Iceland for 28 new food stores

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The Independent Online

Marks & Spencer has stepped up the pace of its Simply Foods convenience store roll-out with the purchase of 28 stores from the frozen food retailer Iceland.

The deal will accelerate M&S's ambitions of opening a further 100 of its focused food outlets over the next two years, increasing its estate to 171 stores once the acquisition is completed. It is paying £38m for the parcel of stores, which it is buying on a leasehold basis.

The turnaround at the group's food arm is helping to drive its recovery. Underlying sales of food shot up by 5.1 per cent during the third quarter, outstripping analysts' expectations.

Stuart Rose, the chief executive, puts much of the success down to its TV advertising. The seductive tones of Dervla Kerwin, who does the voice-over, have been widely ripped off on comedy shows such as Bremner, Bird & Fortune.

Towns from Devizes to Durham will have access to up to 2,000 M&S food lines including ready meals, fresh produce and basic groceries. The 5,000sq ft outlets will also stock a selection of cards and hosiery.

M&S is following in the footsteps of Tesco and J Sainsbury in stepping up its attack on the convenience store sector. Critics of the big stores say the assault is putting some 2,000 corner stores a year out of business, but the likes of M&S counter by pointing to the improved fresh food offer they provide.

M&S has franchised its Simply Foods brands to the food giant Compass, which operates stores for the retailer on railway stations, in motorway service areas and at Heathrow. Including the eight stores it is testing out on petrol forecourts in partnership with BP, it has 40 franchise stores.

Iceland, which was acquired last year by a consortium led by Baugur, used the details of the disposal to announce it had transformed its fortunes in the past 12 months. The frozen food retailer, which is run by its founder, Malcolm Walker, said its like-for-like sales during December surged 16.1 per cent.

Despite the sell-off, Mr Walker said the group was in expansion mode, and was looking for up to 60 new stores in the UK - even in towns where its current store is being sold to M&S.