M&S boosted by demand for premium goods
Marks & Spencer today revealed an increase in sales as consumers trade up to more premium food and clothes despite the squeeze on the high street.
Like-for-like sales at the retail bellwether increased by 1.7% in the 13 weeks to July 2, up from a 0.1% increase in the previous quarter.
Chief executive Marc Bolland said the retailer had tapped into a trend for consumers to "buy once, buy well", which has seen a good response to premium ranges such as Italian meats and body shaping swimwear.
M&S, which has 703 stores in the UK, has grown its share of both the food and clothing markets to 3.8% and 11.7% respectively, according to industry figures.
The "growing demand for quality" and rising costs meant average selling prices were up 7%, compared with 6% in the previous quarter.
The squeeze in consumer spending power has forced retailers including TJ Hughes, Jane Norman and Habitat into administration in recent months, while others, such as Mothercare, Thorntons and Comet, have announced store closures.
But Mr Bolland said M&S was an anchor of the high street and it would continue to invest in its stores.
M&S's sales figures were partly helped by an early start to the retailer's summer sale in response to activity by competitors. The second part of its sale will launch tomorrow.
The better-than-expected sales figures came as Mr Bolland prepared to face shareholders over executive pay, which has been branded excessive by one lobby group.
General merchandise sales were flat, compared to a 3.4% decline in the previous quarter, but volumes were "slightly" down reflecting the tough conditions in the market as nervous consumers delay all but essential purchases.
Best-selling lines include an Autograph suit modelled by former footballer Jamie Redknapp and maxi dresses selling for £49.50.
But customers were also buying sharply priced basic ranges, added the Dutchman, who said the chain had sold 500,000 Brazilian-cut knickers, an increase of 64% on the previous year, after being placed on a buy-three-for-£10 deal.
Food sales were up 3.3% after being boosted by the bank holidays around the royal wedding and Easter as consumers bought more party food.
Some 500 new ranges have been introduced in the period, including new healthy eating products, an Italian deli range and antipasti. Its Dine in for £10 meal deals for two continued to prove popular as consumers ate out less.
But shares were down 2% following the update after the retailer said conditions on the high street would remain challenging due to pressure on consumers' disposable incomes.
Nick Bubb, an analyst at Arden Partners, said: "Today's update should have boosted short-term sentiment as it shows that M&S is keeping its nose above water and ahead of a pretty tough market."
But he added that the flat general merchandise sales were "a bit disappointing" as he had hoped for a 2% like-for-like sales increase.
- 1 Howard Jacobson: Let's see the 'criticism' of Israel for what it really is
- 3 Belgium fan Axelle Despiegelaere lands L'Oreal campaign after World Cup viral photo
- 4 Britney Spears sings 'Alien' without Auto-Tune in embarrassingly brilliant leaked audio clip
- 5 PornHub begs users to stop uploading video clips of Brazil getting beaten 7-1
Instagram of US airport security chiefs: Lipstick knives and IED training kits among items seized
Game of Thrones author George RR Martin says 'f*** you' to fans who fear he will die before finishing Westeros saga
Mick Jagger denies being World Cup curse and reason for Brazil’s embarrassing defeat
Israel-Gaza crisis: ‘We just want it to end… We don’t deserve to live like this’
Israel-Gaza crisis: Eight killed in Gaza Strip cafe while watching World Cup semi-final
Sustained immigration has not harmed Britons' employment, say government advisers
Australia facing international condemnation after turning around Sri Lankans at sea
7/7 memorial defaced on anniversary of 2005 attacks with ‘Blair lied thousands died’ graffiti
Even when it brutalises one of its own teenage citizens, America is helpless against Israel
There’s a nasty smell in the political air – and it’s coming from the Tories
Vanessa Feltz criticises 'vile' reaction to Rolf Harris allegations
iJobs Money & Business
£400 per hour: Orgtel: Technical Business Analyst - Banking - Bristol - £400pd...
£38000 - £42000 per annum + competitive: Real Staffing: Required skills:Previo...
£60000 - £75000 per annum: Harrington Starr: Business Analyst Consultant (Fina...
£60000 per annum: Harrington Starr: A leading provider in investment managemen...