Marks & Spencer (M&S) today released a strong trading statement for the summer, with good growth especially in clothing.

Like-for-like sales for the 13 weeks to September 26 fell by 0.5 per cent, ahead of analysts’ expectations of a 1.5 per cent decline over the period.

Sir Stuart Rose, the chairman of M&S, said that while consumers appear more confident, the retailer, widely seen as the bellwether for the high street as a whole, continued to be cautious. He said: “We expect 2010 to be a tough year and we will continue to run the business accordingly.”

But he believed the group was past the worst. “I would say we’re at the bottom. I wouldn’t say we’re about to go the other way.”

As the key Christmas trading season approaches, M&S is to recruit an extra 20,000 staff to cope with expected demand. “We have the all-important third quarter to come. It’s tough out there but I think we’re doing the right things.”

Group sales as a whole were up 2.7 per cent in the period, with sales in the UK 1.9 per cent ahead. On a like-for-like basis, food sales were flat, signalling an improvement on the 0.5 per cent trading fall in the first quarter. Sir Stuart said this represented the best performance in food for eight quarters. There has been concern that M&S is losing market share in food, which accounts for half of its sales, to rivals.

Clothing sales rose by 2.7 per cent, and the company said it had maintained its market share. Sir Stuart said bigger stores like Marks were gaining at the expense of smaller ones. Sales of clothing for children and men were improved, but lingerie and womenswear were mixed.

Sir Stuart summarised the trading statement: “A good performance and an improvement again in total UK retail, an improvement in food and improvement in general merchandising.” While accepting he was no economist, he said it would not be until 2011 before “UK plc was motoring.”

He said: “It’s going to be tough going for the next 12 to 18 months. I’m not going to call the end.” He added: “I don’t want to be doomy and gloomy. I’m just trying to point out the realities of life.”

The trading statement saw some update on the margins M&S is seeing, always watched carefully by other retailers. The company now expects the full year gross margin to be 50 to 100 basis points lower than last year — a significant improvement in the125 to 175 basis points fall previously forecast. The improvement came from better sourcing, better stock management and some improvement in trading.

Sir Stuart appears to have given up on persuading the Government to extend the temporary reduction in VAT to 15 per cent beyond January next year, an extension the retailers have been calling for. “Clearly they are fairly deaf at the Treasury. They don’t want to hear our pleas.”

Sales at the online operation M&S Direct rose by 30 per cent as consumers shifted further to the Internet.

Source : The Times

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