Business

Marks & Spencer shares jump on clothing sales increase

shop front Image copyright PA

Marks & Spencer shares rose to their highest level in seven years after the retailer posted a long-awaited rise in clothing sales.

The retailer said sales for the three months to 28 March rose by 1.9%.

Closely-watched general merchandising sales, which include women's clothing, rose 0.7% on a like-for-like basis over the quarter, its best performance in nearly four years.

Sales in food also rose by 0.7% for stores open at least a year.

However, overall international sales declined 3.8% as conflict in Ukraine continues and Russia's economy struggles, the retailer said.

M&S was the biggest gainer in the benchmark FTSE 100 index, rising 6.1% compared with a 0.2% rise in the wider market.

"We had a record Valentine's Day and launched over 350 new products over the quarter," said the company in a statement.

Clothing sales were aided by "great fashion press coverage, including that of our iconic suede skirt", said the firm.

Image copyright Marks & Spencer
Image caption Marks & Spencer clothing sales were aided by new product lines, like this £199 skirt

In January, Marks & Spencer said unseasonal autumn weather hit clothing sales, particularly knits, while Christmas food sales were "very good".

In December, disruption at M&S's Castle Donington online sales distribution centre badly affected online sales, which in turn hit general merchandise sales in the month.

The 0.7% sales boost ends 14 quarters of sales declines for clothing, footwear and homewares.

The company said it did fewer promotions, instead focusing on full-price sales.

Online sales jumped nearly 14%, returning M&S.com to growth.

Analysts forecast annual pre-tax profits of £641m, an increase from £623m for the previous 12 months. If the firm hits that target, it will be its first rise in annual profits in four years.

Chief executive Marc Bolland, who took over in 2010, has poured investment into the retailer, sprucing up stores and bringing in new products.

Thursday's figures are a trading update and full results for the year will be released on 20 May, the company said.

Shares closed 23.5p, or 4.4% higher, at 554p, valuing the company at £9.1bn.


Analysis: Kamal Ahmed, business editor

Marc Bolland will have a little spring in his step this morning after finally seeing sales rise in what is known as "general merchandising" - which includes vital womenswear and home.

After 14 straight quarters of decline, the changes brought in by style director Belinda Earl appear to be working.

Customer ratings on style (up 4%) and quality (up 6%) have seen improvements on the quarter, a key metric for Marks & Spencer over which the words "frumpy" and "out of date" once hung heavy.

Shop revamps to ape the success of John Lewis's department store model are working and investors will be cheered that gross profit margins are gently increasing.

That means that M&S is not "buying" market share by discounting. Full price sales are marginally up.

The era of rail after rail of tired black slacks appears to be over.

The international business saw sales fall 6% including currency fluctuations. Although it is only a small part of the overall whole, problems in Russia, Ukraine and Turkey are of concern.

Mr Bolland, the chief executive, does remain committed to those markets. Just as he is, I am told, to plucky Greece.


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