Womenswear boosts M&S sales

Thursday 10 April 2014

Marks & Spencer delivered better-than-expected sales figures today amid signs of a revival for its struggling womenswear business.

The retailer said clothing sales rose 0.6% on an underlying basis in the 13 weeks to March 29, driven by "clear signs of improvement" in womenswear following last autumn's relaunch of its M &S Collection.

Marks said in a trading update: "Customers are responding well to our refocus on quality and style."

Across general merchandise, which includes homewares as well as clothing, like-for-like sales were 0.6% lower in the quarter. It means the company has suffered three years of declines in the division, although today's figure was better than the 1% fall expected in the City.

The company, which has hired new senior personnel and launched a celebrity marketing push in a bid to revive its fashion business, said the improved performance came in the face of high levels of discounting.

It added: "Despite some improvement in consumer confidence, we remain cautious about the outlook. Our focus is on continuing to transform Marks & Spencer into an international, multi-channel retailer."

Marks said its food department had a "great quarter", with the later timing of Easter failing to prevent an 18th quarter in a row of like-for-like growth. Shares opened more than 2% higher today in the wake of the resilient sales performance, which was offset by continued pressure on margins.

Annual results are due to be published on 20 May, with City expectations ahead of today's update pencilling in a 6% fall in profits to £623 million. It will mean the 130-year-old company being overtaken for the first time by rival Next - a relative upstart at 32 years old - which last month announced profits of £695 million.

Freddie George, a retail analyst at Cantor Fitzgerald, kept his sell rating on the stock today and warned the profits figure could go as low as £610 million.

He added: "We continue to believe it will take a number of seasons before the existing team is able to manifest a marked improvement in performance in womenswear."