M&S sales up but Bolland urges caution
MARKS and Spencer posted a third consecutive rise in underlying quarterly sales, though its rate of improvement slowed a little and it joined rivals in sounding cautious about the consumer outlook.
The company said sales at British stores open at least a year rose 3.6 per cent in the 13 weeks to 3 July.
That was toward the top end of forecasts and boosted by a strong performance in clothing, though it was down from a 5.1 per cent rise in the previous quarter.
Britain’s retailers are concerned that higher taxes and public spending cuts aimed at slashing record government borrowing – as announced in an emergency budget on 22 June – might hit consumer spending in the months ahead.
“Following the recent Budget and the actions proposed to reduce the national deficit, including the increase in VAT (sales tax), we are cautious about the outlook,” M&S chief executive Marc Bolland said, though he did not expect the British economy to fall back into recession.
M&S, which serves 21 million Britons a week from over 650 stores and also has about 300 shops abroad, was hit hard in the recession, particularly in its upmarket food business.
It has fought back with lower-priced “Wise Buys” in food, new clothing ranges like “Indigo”, and a revamped online offer.
Like-for-like general merchandise sales, which include clothing and homewares, were up 6 percent in the first quarter, while food sales were up 1.5 percent on the same basis.
That was excluding a benefit from Easter, which would have added about 0.4 percent and 1.4 percent to the figures respectively, M&S said.
“Another pleasing sales update, demonstrating an improving two-year trend,” said Ambrian analyst Philip Dorgan, though he considered it a “holding statement” before Bolland announces his longer-term plans for the group in Nov