Fashion sales back on track at M&S in last quarter

Marks and Spencer said general-merchandise revenue advanced for the first time since 2011 as the retailer finally got fashion sales back onto an upward trajectory.

Same-store sales at the non-food unit gained 0.7 per cent in the 13 weeks ended March 28th, the London-based retailer said Thursday in a statement, beating the median estimate of 21 analysts surveyed by Bloomberg for a 1.1 per cent decline.

“Positive clothing sales shows M&S is resonating with consumers again,” Charles Allen, an analyst at Bloomberg Intelligence in London, said by phone. Revenue growth was driven by the retailer’s online business, he said.

The performance provides relief for chief executive Marc Bolland, who has been under pressure to reverse more than three years of declining non-food revenue. Same-store sales of clothing rose 0.6 per cent in the quarter, M&S said, also flagging that operating costs increased less than forecast.

“We have made strong progress,” Mr Bolland said in the statement. The improved clothing performance was driven by “continued focus on product quality and styling,” the retailer said, adding that its spring-summer fashion collections have been well received by customers.

M&S also reported same-store sales growth of 0.7 per cent in its food business, bucking the trend in a grocery market characterised by deflation and intense competition. Revenue at three of the country’s four largest supermarkets fell in the 12 weeks to March 1st, according to researcher Kantar Worldpanel.

Also Thursday, the retailer said full-year operating costs rose about 1.5 per cent, compared with its previous guidance for a 2 percent increase. M&S kept its forecast for gross margins to widen by 1.5 to 2 percentage points in general-merchandise and by 0.1 to 0.3 percentage points in food. The company is due to report full-year earnings on May 20th.

Bloomberg