Marks & Spencer (M&S) has beaten market expectations after posting a 2 per cent increase in like-for-like UK sales during the rain-sodden first three months of its financial year but warned that short term trading remains “very challenging”.
The retailer revealed its first quarter results as Stuart Rose, the chief executive at M&S, confirmed today that he will meet this week with George Davies, the chairman and founder of the company’s successful womenswear group Per Una, about his future.
Mr Davies’ contract is up for renewal in autumn. Mr Rose said today: “George is George,” adding: “He is a man of 65 who is starting to think about what he wants to do next.”
M&S’ like-for-like UK sales, which strips out gains from new stores opened during the quarter, were the worst for nearly two years, however the company was expected to announce sales up between 0.7 and 1 per cent for the three months to June 30, 2007. This compares to the three months to March , the end of M&S’ financial year, when underlying sales grew by 3.8 per cent. In the first quarter in 2006, like-for-like revenue grew 8.2 per cent.
M&S shares rose 2.45 per cent to 648p in early trading, arresting some of the decline in the company’s share price since May when poor weather and interest rate rises caused nervousness about the company’s sales performance from investors.
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This morning Mr Rose appeared to step back from his now infamous comment of last November that “weather is for wimps”, describing the quarter as strange and citing pictures of people forced to travel in boats after being affected by the recent freak storms.
Mr Rose said that trading in April started strongly, adding:” You can draw your own conclusions about May and June.”
He also said: “Rising interest rates, general uncertainty over consumer spending, and extreme weather conditions combined to make market conditions particularly volatile over the quarter.”
In the UK, like-for-like sales of food edged up just 0.7 per cent but underlying revenue in general merchandise, which includes clothing, increased by 2.9 per cent. Overall sales throughout the company rose by 7 per cent despite three million square feet of trading space being disrupted because of M&S’ extensive store restructuring programme.
In the UK, total sales increased by 6.4 per cent, helped by 33 new Simply Food stores opened during the quarter. International sales, rose by 14.8 per cent as the company opened new shops in Lithuania, Taiwan and Ukraine.
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Company-wide sales of clothing increased by 3.5 per cent, revenues from home furnishings and products increased by 13.4 per cent and food sales grew by 8.5 per cent.