Rose 'encouraged' by M&S sales recovery
Marks & Spencer halted a two-year trading slump today after new ranges and an overhaul helped the embattled retailer to a surprise pick-up in sales.
In a surprisingly strong update, M&S posted its first quarterly sales rise since October 2003 and said profits would be at the top end of expectations.
Chief executive Stuart Rose drew encouragement from the performance, but warned it was still early days in the recovery battle – particularly with the key Christmas trading season just around the corner.
Shares in M&S responded by hitting their highest level in more than three years today – within a whisker of the 400p level that retail tycoon Philip Green was willing to pay in last year’s failed takeover attempt.
Mr Rose said: “This is an encouraging performance, but there remains much to be done. The environment remains very difficult and we have the important Christmas trading period ahead.”
He said it was too early to say M&S was “calling the turn”, adding: “If we get to January with similar numbers I might be prepared to go there.”
The 1.3% increase in like-for-like sales for the 12 weeks to October 1, compared with a decline of 5.4% in the pervious quarter, came despite the toughest conditions on the high street in years.
Experts had started to predict an upturn in recent weeks but were still surprised by the extent of the improvement.
Among changes, M&S has attempted to secure better deals from suppliers and kept tighter control of stock. It has also embarked on a major pre-Christmas advertising drive featuring 1960s supermodel Twiggy.
Mr Rose said products and stores were looking better and that offers such as £1 (€1.50) pairs of socks and £20 (€29.10) jeans were drawing in customers. This was helping it snatch market share from rivals.
“I think people are coming into Marks & Spencer to have a look because they have heard from friends and neighbours that we have got some fantastic offers,” he said.
Richard Ratner, retail analyst at stockbroker Seymour Pierce, described the performance as “excellent”, with much of the credit going to Mr Rose.
He said: “Whilst much of what Stuart has done has been relatively easy fixes, at least he has been perceptive enough to grasp the low-hanging fruit – many wouldn’t know what to do.”
Before today, analysts had predicted pre-tax profits of between £240m (€349,300) and £307m (€447m) for the six months to October 1.
