M&S "on track" after first quarter sales boost

Marks & Spencer share price UK sales dip in Q1

I am pleased that we continue to grow full-price sales in Clothing & Home, with reduced discounting and no clearance sale in the quarter.

M&S also axed 27 promotions in the quarter.

Like for like food sales at premium retailer Marks and Spencer fell by 0.1 per cent in the 13 weeks to 1 July.

"With further changes in year-on-year trading and promotional strategy to come, we do not anticipate a clean LFL trading number to emerge until the fourth quarter of fiscal year 2018", he said.

While LFL sales in food stores fell 0.1% amid the cutthroat grocery market, on a total sales basis food sales were up 4.5%, thanks to new outlets being opened.

Meanwhile, food like-for-likes stayed flat in the first quarter, showing a marginal 0.1 per cent dip.

The Brexit-driven slump in the pound has also prompted customers to be more frugal in spending on non-essential items, such as clothing, hitting the United Kingdom retail sector.

The economic backdrop is not in M&S's favour, as consumers get squeezed on the back of rising inflation and weak wage growth, which is eating into spending power. "Overall, the sales numbers are modestly below expectations but the commentary is reasonably encouraging with new Simply Food stores performing well and the increase in full price clothing sales sounding positive for profit implications".

Liberum was also upbeat, saying it expects the company's restructuring will eventually bear fruit.

"Partnerships & Regeneration continues to enhance its position to benefit from the demand for affordable housing, while Construction's margin is expected to increase as we close out legacy positions", the company said.

She said: "Analysts are starting to question whether M&S is falling behind its peers, particularly in food and drink sales".

In May, the company announced it was recruiting Jill McDonald, the former boss of bicycle and vehicle parts retailer Halfords, to lead the apparel and homewares division. The deal returned with more options, including two different cuts of steaks and a beef roasting joint.

Rowe added full price sales were up by approximately 7% in the home and fashion division, as the retailer reduced the number of promotions and there was no clearance sale in the quarter compared with one previous year.

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