Marks and Spencer food sales offset clothing weakness
Marks and Spencer sales rose slightly in the first three months of 2013, as good trading from its food business offset a fall in clothing sales.
Like-for-like UK sales were 0.6% higher in the quarter, helped by a 4% increase in food sales. General merchandise sales, including clothing, fell 3.8%, the seventh quarter in a row they have fallen. However, analysts had forecast a steeper fall, and M&S shares closed up 4.3%, the biggest FTSE 100 riser. Clothing, where the company still has an 11% share of UK womenswear, has been the weak spot for M&S in recent years, despite a raft of initiatives. The company has tried bringing in an assortment of people from rival stores, and has attempted to broaden its appeal though sub-brands, such as Per Una and Autograph. The latest recruits are Belinda Earl, the former Debenhams and Jaeger boss, and Janie Schaffer, who formerly worked at lingerie chain Victoria's Secret. Analysts say it will be some time before the success of these appointments is known. Testing times They are still waiting to see clear results from M&S chief executive Mark Bolland himself, who has been in the role for three years. He is under close scrutiny from investors. The main test will be this year's autumn and winter collections, which will be first seen on 14 May. David Cumming, head of equities at Standard Life Investments told the BBC: "He has to get his autumn range right, that's when the management changes that he's made will have an impact. "I think the market will wait to see how that range, which doesn't really come through until six to nine months, is going to work. If that is poor, then he'll be under a lot of pressure." Mr Bolland said: "We are working hard on improving our performance in general merchandise, and despite difficult trading conditions, we made progress in our operational execution." Most clothing retailers have struggled to maintain sales recently, as the cold weather has led to shoppers holding back from buying summer clothes. Food 'outstanding' One area where the company's performance is clearly working is food, which had notched up three years of consecutive quarterly sales growth. M&S called the performance outstanding, adding that Easter food sales had been their best ever. It claimed the food outlets were now the "destination of choice" for customers seeking new, quality products. Overall sales at M&S, including its international business, were up 3.1% in the quarter, and the retailer said it had delivered its strongest quarterly sales for two years. Earlier this year, its shares hit a 28-month high on talk it was a takeover target, although no organisation has publically said it is interested in making a move. Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said investors were getting impatient with the company: "There has been some exasperation at the speed of the M&S revival. "Ultimately, the company remains a work in progress. Even after the recent vague bid speculation, the shares have added just 6% over the last year, as compared to a 14% hike in the wider [100-share index]." Tarlok Teji, retail analyst at Manchester Business School, said that vague takeover talk could turn into action: "Marks and Spencer is an interesting retailer which has some fundamental issues despite group sales being up. It has pockets of excellence, such as food and undergarments. "On a turnover of £10bn, it has a market cap of £6.1bn, whereas Next has a market cap of £6.7bn on a turnover of £3.5bn. Mr Bolland needs to make some bold moves and quickly as Marks & Spencer is currently ripe for acquisition." The company's recent performance echoes out a report this week from the British Retail Consortium (BRC) ,which said that clothing and footwear retailers suffered a dire March, although food sales had risen thanks to the cold weather boosting the appetite for hearty meals.