M&S looks to older customers for help

The group yesterday said it is well placed for tougher trading as it has out-performed rivals and beat City expectations with a 5.3 per cent jump in second quarter like-for-like UK sales.

Shares lifted 4.9 per cent to close at 410p.

M&S, which serves 21 million Britons a week and trades from 650 stores in the UK, hopes older customers will help pull it through the deteriorating retail climate.

"In general we have seen that older customers are better prepared for tougher times," said chief executive Marc Bolland. "They have seen it before and they have more savings. The younger customer feels less prepared for the future."

The former Morrisons chief executive initiated a new autumn/winter advertising campaign on arrival, which helped the group top expectations in the 13 weeks to October 2.

Sales were up from 3.6 per cent in the first quarter and significantly ahead of analysts' forecasts of a 3.2 per cent rise.

Like-for-like UK sales of general merchandise, which includes clothes, footwear and homeware, surged seven per cent. Food was up 3.7 per cent.

M&S trounced recent updates from rivals: Tesco posted like-for-like sales growth of 1.3 per cent in the second quarter, while Sainsbury's growth was 2.9 per cent for the same period.

The new ad campaign, featuring model and presenter Lisa Snowdon, helped M&S grow market share in clothing by 70 basis points to 10.3 per cent. Its food market share was up 10 basis points at 3.7 per cent.

Launched on September 8, M&S said the advertising drive pulled another 1.8m extra customers through its doors.

But the retailer warned it faces tougher comparatives in the second half, plus increased commodity prices, and consumers will be hit by the January VAT rise to 20 per cent.

"We do not think a double dip will come up," said Mr Bolland, adding M&S is cautious about the outlook for the rest of this year and next. He said M&S will resist significant price increases for customers.

"We would like to stay very close to opening price points," he said."We want to make sure that we stay competitive."

He added customers are no longer solely focused on price and are seeking out quality. "They buy once and buy well in general merchandise articles."