Shares in British retailer Marks & Spencer shot to a 20-month high yesterday after a long-awaited turnaround in women's wear produced the first quarterly sales increase for three years.
Second-quarter group sales were up 2.8 per cent in the 12 weeks ended September 29th or 2.1 per cent on a same-store basis.
Although the figures were flattered by weak comparisons last year, they showed a much bigger than expected improvement. Within overall sales, clothing, footwear and gifts were up 0.8 per cent compared with a drop of 9.1 per cent in the first quarter and predictions of a 7 per cent fall.
Chairman and chief executive Mr Luc Vandevelde, who was brought in at the start of last year to engineer a change in the group's fortunes, cautioned that there was a long way to go but said he was "glad and proud" to see the group begin to reap benefits from its massive overhaul.
Mr Vandevelde has been criticised in the past for calling a turnaround too soon, only to see sales slip away.
He has a self-imposed two-year deadline to revive sales.
Over the last three years Britain's biggest clothing retailer has lost market share as shoppers deserted its tired fashions and dowdy stores for newcomers such as Spain's Zara and budget operators like Matalan. Meanwhile, stores such as Next continued to rack up strong sales.
"I trust we can show evidence of success by March next year," Mr Vandevelde said, adding that this time he saw no reason why the improvement in sales shouldn't be sustained.
Mr Vandevelde cautioned that there was still a long way to go. "This is the end of the beginning rather than the beginning of the end."
Investors were rewarded with the shares hitting a 20-month high of 324 pence sterling before falling back to close at 307p, up almost 10 per cent.
Marks & Spencer admitted a 1.3 per cent increase in its second-quarter non-food sales was distorted by comparison to the same quarter last year, when shoppers stayed at home because of gasoline shortages caused by a national truck drivers' protest.
Nevertheless, it said there was a real improvement in the quarter in sales of clothing, in particular women's wear.
The autumn range, the first to be fully influenced by the management team, has been well received. Analysts said gross margin improved across the group was up 120 basis points as M&S's controversial overhaul of suppliers helped cut costs.
Future performance may be helped by Per Una, a new range of more youthful women's wear designed by George Davies which has exceeded initial sales targets, causing a shortage of stock. The launch came too late to affect second quarter figures.
While clothing sales were relatively strong, food sales which contribute around 45 per cent of turnover were weaker than predicted. They grew 4.9 per cent in the quarter compared with 5.9 per cent in the first quarter.
Marks & Spencer does not release trading figures for its operations in the Republic.
But the company said its four stores had continued to perform well in the 12 weeks to September 29th, boosted by food and children's wear sales and the effects of further investment in its operations in Mar Street in Dublin and in Cork.
