Marks & Spencer posted a smaller-than-expected fall in fourth-quarter underlying sales, raising hopes the landmark British retailer is finally getting to grips with its problems despite a tough trading outlook.
The 125-year-old firm, which serves 21 million Britons a week from more than 600 stores, said today sales at UK stores open at least a year fell 4.2 per cent in the 13 weeks to March 28th.
That is an improvement on the 7.1 per cent drop in the third quarter and beat analysts' forecasts for a decline of between 6.5 and 7.5 per cent, according to a company poll.
M&S operates 18 stores in the Republic and employs around 2,800 people.
M&S has been hit hard by a consumer downturn, exacerbated by self-confessed mistakes, particularly in its upmarket food business.
Executive Chairman Stuart Rose told reporters the overall market had not improved and the outlook remained uncertain, but said he was hopeful the improving trend would continue in the first quarter of the new financial year.
Traders said shares in Marks & Spencer (M&S), Britain's biggest clothing retailer, would open up as much as 4 per cent.
Many of Britain's retailers have been struggling as shoppers cut spending amid rising unemployment, sliding house prices and fears of a long and deep recession.
Fashion and homewares group Laura Ashley said today its annual underlying profit fell 39 per cent, while Clinton Cards posted a 46 per cent drop in first-half net profit before tax, but crucially extended bank agreements.
M&S has been hit particularly hard, in part because of self-confessed mistakes in its upmarket food business.
These mistakes have piled pressure on Rose, who was already under fire from investors for combining the jobs of chairman and chief executive against corporate governance best practice.
M&S's like-for-like UK general merchandise sales, comprising clothing and homewares, fell 4.8 per cent after an 8.9 per cent drop in the third quarter, while underlying food sales were down 3.7 per cent, having fallen 5.2 per cent the previous quarter.
Adjusting for the timing of Easter would add about 0.7 percentage points to both measures, M&S said.
“Our customers are responding positively to the actions we have taken," Rose said in a statement, highlighting the group's popular “Dine In” food promotions and the success of its new Portfolio women’s wear range.
M&S said it had held its clothing market share in the year ended March 2009. Shore Capital analyst Kate Calvert, however, was not convinced.
“Sales are much better than expected, but there has been margin investment and it's also been offset by cost pressure,” she said, keeping a “sell” rating on the shares.
Reuters