Simply Food may survive format review

Marks & Spencer's Simply Food format is likely to survive Rose's review, but the retailer's food prices generally must be cut in the face of intense competition, according to analysts.

However, former boss Roger Holmes' ambition to build Simply Food from 60 stores to 400 is likely to be curbed.

Analysts at Deutsche Bank noted: 'We would not be surprised if Rose announced a halt to this extension, but announced his support for the format as a whole.'

The broker added: 'Given the tough competitive environment, we expect Rose to announce a review of the pricing proposition of M&S's food business.'

Charles Stanley analyst Simon Proctor argued that M&S's food offer was hampered by a 'lack of sharpness on pricing and product development'. He remained convinced, however, that Simply Food has a future.

However, one food retail director questioned the viability of Simply Food, because of high rents and competition from Tesco, Sainsbury's and Waitrose. He said: 'M&S needs to invest in product research and development if it is to regain its reputation for quality fresh food above everyone else.'

M&S is hunting for a head for its food division and Tesco commercial director Dido Harding is tipped as the retailer's top target. M&S's US supermarket business, Kings, could be offloaded. US retailers Gristedes and D'Agostino are both interested in Kings, but have not been contacted by M&S about a sale yet.