It has offloaded Kings Super Markets to a private equity consortium for $61.5m (£35.3m), about half the $110m it paid for the chain in 1988. The sale, which followed three failed attempts, adds M&S's name to the long list of British retailers to fail in the US just as Tesco embarks on planting its flag on the country's West Coast.
Ian Dyson, the finance director, said the disposal was part of "tidying up" M&S to free up management time to concentrate on its nascent UK recovery. He has overseen the group's international division, which includes stores in Ireland and Hong Kong as well as franchises in countries from the Middle East to Russia, since joining the retailer last year.
Bruce Weitz, the former chief executive of Duane Reade Drugstores, is leading the acquisition on behalf of Angelo, Gordon & Co and MTN Capital Partners. The consortium topped a list of financial buyers that had expressed an interest in Kings since it was put back on the block after Christmas.
Neither Gristede's nor D'Agostino Supermarkets, the two regional chains that had come close to a deal in the past, were among the bidders this time.
The City welcomed the sale, sending shares in M&S up 2.5p to 556.6p. Some analysts are predicting the stock, which only burst through the 400p milestone that Philip Green signalled he might bid for the company last autumn, could rise to 625p. "Though very small in a group context, this disposal of Kings represents the last part of M&S's refocusing program and removes an operation that is strategically challenged," analysts at Citigroup said.
Mr Dyson said: "Kings has been okay [for us] but it only has 26 store so it just hasn't got the scale." In the past five years Kings' operating profit has collapsed from £12m to £4.3m. A year after buying the group M&S wrote off £62m of goodwill. M&S has had a torrid time in the US. It has never tried to take its brand across the Atlantic, but its purchase of Brooks Brothers cost it dearly, losing it two-thirds of its initial outlay when it sold the "preppy" menswear chain for £160m in 2001.
Separately, M&S recently dealt a bloody nose to Mr Green, poaching Neil Hendy from his Bhs chain to become head of women's clothing design.
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