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Marks & Spencer Posts 1.9 Percent Rise in Q4 Sales

The retailer's general merchandise revenues fell 0.6 percent on a same-store basis.

LONDON — Gains in both clothing and food sales helped Marks and Spencer Group plc’s sales rise 1.9 percent in the 13 weeks to March 29, versus the same prior-year period, the U.K. retailer said Thursday.

M&S’ clothing sales gained 1.3 percent in the quarter, up 0.6 percent on a same-store basis. The retailer’s general merchandise sales — a figure that contains clothing, which is closely watched by analysts — advanced 0.2 percent, but fell 0.6 percent on a same-store basis. The 0.6 percent decline was slightly less of a fall than analysts had expected, and compared to a fall of 3.8 percent for the category’s same-store sales a year ago.

Marc Bolland, chief executive officer of M&S, pointed to the “improvement” in M&S’ general merchandise sales, in particular the clothing category’s performance. “We are encouraged by women’s wear, which is showing clear signs of improvement ahead of clothing,” said Bolland. The retailer also noted that the relaunched M&S Collection women’s wear range performed well compared to the previous year, and that the collection’s spring line has been well received by customers.

However, analyst Jamie Merriman at Bernstein Research in London noted: “While M&S have hinted at a better performance in women’s wear, it is difficult to see how much of this has been driven by improved sentiment and how much by promotion.” The analyst continues to rate the retailer’s stock as “underperform.”

Indeed, M&S said it expects gross margins for the general merchandise category to be down for the second half, “as a result of a highly promotional market,” adding that it expects its full-year U.K. gross margin to decline by around 20 basis points. “Despite some improvement in consumer confidence, we remain cautious about the outlook,” the company said.

Food sales at M&S were up 2.5 percent in the quarter, rising 0.1 percent on a same-store basis. Its international sales gained 4.7 percent, with the retailer seeing strong growth in India, China and the Gulf states. Online sales, meanwhile, rose 12.5 percent in the quarter during which M&S migrated its site to its own platform from an Amazon platform.

M&S released only percentage figures Thursday, with the retailer set to report full-year results on May 20.
Although M&S’ shares had initially risen on the London Stock Exchange Thursday morning following the trading update, they closed down 3.1 percent to 4.42 pounds, or $7.07 at current exchange, Thursday afternoon.