SHARES in Marks & Spencer leapt nearly five per cent after the high street giant reported its best clothing sales in nearly four years as customers warmed to its latest fashion ranges.
M&S said like-for-like sales at its general merchandise arm rose 0.7 per cent rise in the 13 weeks to March 28 as shoppers welcomed improvements in product quality and styling and the group managed to sell more items at full price.
The rise follows 15 quarters of falling like-for-like fashion sales as Britain’s biggest clothing retailer failed to gauge shoppers’ needs.
It was also better than analysts’ average forecast of minus 1.2 per cent and followed a third-quarter decline of 5.8 per cent, which reflected warm weather in October and November and disruption at its e-commerce distribution centre in December.
The company’s food business also reported a 0.7 per cent increase in like-for-like sales in the 13 weeks to March 28, helped by record Valentine’s Day sales.
The market welcomed the news and M&S shares closed the day up 23.5p at 554p.
Nicolas Ziegelasch, head of equity research at Killik & Co, said: “The spring/summer ranges have been well received by customers as evidenced by a strong improvement in customer research scores, as well as favourable fashion press coverage.
“There was less promotion activity and more focus on full price sales. However, this was partly off-set by more stock going into the Christmas sale as a result of the unseasonal conditions through the Autumn/Winter season.
“We remain buyers of Marks & Spencer, given its recovery and cash generation potential which we believe will support strong dividend flows over the medium-term.”
M&S chief executive Marc Bolland, the former Morrisons CEO, has spent billions of pounds addressing decades of under-investment in general merchandise and overseeing a redesign of products, stores, logistics and its website.
“It’s a step-by-step journey and we’re taking steps in the right direction,” he said.
In stark contrast, the food business has outperformed the wider grocery market as M&S has secured its niche in the upmarket grocery sector.
“Food sales grew both at total and like-for-like level, as our specialist positioning continued to deliver results, in a difficult, deflationary quarter for the food market,” said Mr Bolland.
“Customers turned to us for special times of the year as well as everyday quality they can trust.
“We had a record Valentine’s Day and launched over 350 new products over the quarter.”
M&S.com sales returned to growth in the quarter with sales up 13.8 per cent and the group said its new distribution centre at Castle Donington performed well over the quarter.
However, M&S said macro-economic issues in Russia, Ukraine and Turkey, coupled with a weakening in the euro, had dented second-half profit in its international division, where fourth-quarter sales fell 3.8 per cent.
M&S is expected to post a first profit rise in four years when it reports yearly results on May 20.
The group said it expects analysts’ profit consensus for 2014-15 to edge up from the £641m average before the update.
A rise in profits will provide a welcome reprieve for Mr Bolland, whose position has looked risky following high profile departures at Morrisons and Tesco.
Asked how long he planned to stay as CEO, he said: “I’m really enjoying the role and there’s more to do.”