M&S beats City hopes with sales surge

The bonus award, which was paid this week, includes a handout of between 200 and 500 to around 50,000 store staff.

M&S smashed expectations for its fourth quarter trading in the 13 weeks to March 27, with general merchandise sales up 9.1 per cent and food sales up 1.8 per cent - although the like-for-like figures were boosted by the inclusion of the first day of the Christmas sale.

M&S said the employee bonus handout - the first to store staff since 2008 - reflected "out-performance" against its targets for the year.

It now expects pre-tax profits for the 53 weeks to April 3 of between 680m and 690m, including 60m from an extra week of trading this year and taking into account a bigger than forecast staff bonus payout.

M&S said its "self-help" measures were beginning to pay off, with total UK sales up 6.2 per cent and online sales soaring by 48 per cent in the quarter.

The chain said same store growth was lifted by around 1.3 per cent thanks to the benefit of a Christmas sales trading day, which added around 2.9 per cent to general merchandise sales.

But the figures were still far higher than most City analysts had pencilled in.

M&S chairman Sir Stuart Rose - presenting his last set of figures before new chief executive Marc Bolland joins from Morrisons next month - said: "These are strong quarterly results by any measure."

But he continued to give warnings over consumer prospects for the year ahead and amid the uncertainty of a General Election.

He said: "We have weathered the immediate impact of the recession, but remain cautious about the outlook for 2010/11 given the current challenging environment.

"We hope that after the election there will be greater clarity on economic policy and how this will impact our customers individually. With this will come improving consumer confidence which is so important for our business and the economy as a whole."

Today's sales rise marks the second quarter of growth in a row after the group posted a 0.8 per cent hike for the previous three months, which marked the first increase in two years.

M&S has had a far better year after seeing profits drop by 40 per cent in the previous 12 months as the UK plunged into recession.

Sir Stuart said the group was winning market share from all its rivals, thanks to an overhaul of product ranges and store improvements.

Strong profit margins on UK general merchandise sales are also offsetting the impact of falling food price inflation and declining international sales, which were down 5.9 per cent in the quarter.