Shares in high street bellwether Marks & Spencer dipped 3% yesterday despite a small sales lift for the chain’s struggling fashion division.
Clothing sales rose 0.6% on an underlying basis in the 13 weeks to March 29. The better-than-expected performance led CEO Marc Bolland to hail “encouraging” progress since the firm relaunched its signature M&S Collection last autumn.
The rise was not enough to fully offset sales falls in the wider general merchandise category, which includes income from homewares. The division posted a 0.6% decline for the quarter, extending a three-year run of falling sales.
Mr Bolland whose strategy to stem the decline in the division led to the hiring of senior design staff and a campaign of celebrity endorsement including Helen Mirren and Katie Piper said signs of improvement were heartening.
“We delivered another quarter of improvement in general merchandise,” said Mr Bolland.
“Clothing sales were up 1.3% in total, up 0.6% on a like-for-like basis. We are encouraged by womenswear, which is showing clear signs of improvement and performed ahead of clothing.”
The company has long relied on the performance of its food operation to boost its bottom line. Total sales were up 2.5% in the period but were just 0.1% ahead on a like-for-like basis.
Mr Bolland said: “Our food business had another great quarter, especially considering the later timing of Easter.
“This marks our 18th consecutive quarter of growth. We continued to outperform the market with record sales around key events including Valentine’s Day and Mother’s Day.”
Shares in the company climbed 3% in early trading yesterday but later fell back to close down 14p at 442p as investors’ attentions turned to the squeeze on margins caused by discounting rivals.
M&S will publish full-year results on May 20, with the City expecting a 6% fall in profits to £623 million a result that would see the company fall behind rival Next for the first time in its history.