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Three reasons for Marks to be cheerful
A combination of sunny weather, the timing of Easter and its 125th anniversary celebrations have helped high street giant Marks & Spencer to outperform City expectations.
The retailer posted a smaller-than-expected drop in first quarter like-for-like sales and said consumer confidence appears to be stabilising.
Executive chairman Sir Stuart Rose said the group has seen an improved performance.
"We are in a much better place than we were last year," he said. "Last year we were falling off a slope. Now we are seeing more stability and confidence has improved."
Asked whether this meant the worst of the recession is over, he said it was too early to tell.
"We don't know where the second and third quarters are going to go."
M&S, Britain's biggest clothing retailer, said like-for-like sales fell by 1.4 per cent in the 13 weeks to June 27, an improvement on the 4.2 per cent fall seen in the previous three months.
This was the best performance since the second quarter of its 2007-08 year as new products and promotions drove market share gains. The 1.4 per cent fall was better than analysts' forecasts of a fall of 1.8-3.5 per cent.
M&S reported improved market share in clothing and homeware, with the clothing market share up by 30 basis points. Like-for-like general merchandise sales fell by 2.4 per cent, but food like-for-like sales were down by just 0.5 per cent.
The launch of the group's Wise Buys cheaper food range, designed to stop shoppers migrating towards cheaper mid-market rivals such as Sainsbury's, has gone well and now makes up 20 per cent of food sales just 18 months after it was launched.
The sunny weather has helped boost sales, especially compared with last May when Sir Stuart said the weather "fell apart" in mid-May.
"Last year's weather was not great and if we have some more of this sunshine we'll take it," he said.
The timing of Easter boosted sales by about 0.7 per cent.
The 125th anniversary celebrations last month also attracted thousands of shoppers keen to snap up bargains.
But the better than expected figures are not likely to relieve the pressure on Sir Stuart, who has been criticised for combining the roles of executive chairman and chief executive against corporate governance guidelines.
He survived an investor rebellion last July, but faces fresh calls to appoint an independent chairman by this time next year at a shareholder meeting on July 8.
Sir Stuart said that the board's position on succession – that it will appoint a new chief executive next year and that Sir Stuart will step down as chairman by July 31, 2011 – had not changed.
He declined to comment on reports that deputy chairman David Michels had put himself forward as a possible successor as chairman, other than saying he would be a "very credible candidate" when the board decided to appoint a new chairman.
Pali International analyst Nick Bubb said: "The first quarter figures are better than expected. But the weather's been good, the comparative figures from last year were softer and they've been cutting prices. So it's difficult to give them too much credit."
M&S is to relaunch its confectionery range in September, which will include new products like 'pick 'n' mix' – a favourite at the collapsed Woolworths chain.
CELEBRATING 125 YEARS
Marks & Spencer is celebrating 125 years on the high street with a nostalgic advertising campaign to commemorate some of the group's innovations such as sell-by dates and machine-washable suits.
The 'Quality Worth Every Penny' campaign stars fashion model Twiggy in a minute-long TV ad, which is also running across billboards and in stores.
M&S began life when Michael Marks opened a market stall in Kirkgate Market, Leeds, in 1884 with a sign next to it saying 'Don't Ask the Price, It's a Penny'.
Twiggy also launched an exhibition in Leeds last month to celebrate M&S's 125th birthday.
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Weather for Yorkshire
Friday 25 May 2012
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Sunny
Temperature: 10 C to 23 C
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