New M&S boss Marc Bolland braced for tougher times

Marks & Spencer's new boss Marc Bolland said he was braced for tougher times today despite delivering better-than-expected sales in his inaugural update.











The former head of Morrisons, who joined M&S on May 1, reported same-store sales up 3.6% in its first quarter - a result that would have been around 0.9% higher with the timing of Easter stripped out, according to M&S.



The result beat market forecasts for a rise of 2.3% and marked the chain's third quarter of sales growth in a row as its recovery gains momentum.



Strong demand for barbecue foods and summer knitwear helped it notch up like-for-like sales growth of 1.5% for food and 6% for general merchandise in the 13 weeks to July 3, or up 2.9% and 6.4% respectively on an underlying basis.



However, the group's shares fell more than 3% in a wider stock market sell-off as the group said Government austerity measures and the incoming VAT rise to 20% posed a threat to consumer spending.



"We have made a good start to the financial year, but following the recent Budget and the actions proposed to reduce the national deficit, including the increase in VAT, we are cautious about the outlook for consumer confidence and spending," it said.



The group still believes the wider economy will avoid a double-dip recession, although it is braced for pain on the high street from spending cuts and tax hikes.



Mr Bolland added: "It's too early to see the effects (of the Budget) at the moment, but we will certainly see the effects coming through in the next three quarters."



Despite the disappointing market reaction to today's figures, analysts gave the group the thumbs up.



Philip Dorgan at Ambrian said it was "another pleasing sales update, demonstrating an improving two year trend".



"M&S is not without its problems, but we believe that they have solutions," he added, citing the group's potential to trade more aggressively online.



Jean Roche at Panmure Gordon said M&S was also likely to "hold up relatively well" amid Government spending cuts and tax hikes thanks to its more upmarket target customer base.



M&S said it had gained market share in clothes thanks to improved ranges, while it added 570 new products in its food aisles.



Its internet offering M&S Direct saw sales leap 49% higher, although the international division posted a more muted 0.9% lift in sales as trading was hit by economic woes in Ireland and Greece.



Retail experts are now waiting to hear details of Mr Bolland's plans for the group at the interim results in November.



He is currently on an induction period as part of a handover with outgoing boss Sir Stuart Rose, having spent his time so far visiting stores, suppliers and international operations.



Mr Bolland is also preparing for his first annual general meeting with M&S next week, when pay is likely to be high on the agenda once more, with packages for Mr Bolland and Sir Stuart under scrutiny.



The group is also recruiting a new finance director to replace Ian Dyson, who dealt an early blow to Mr Bolland by announcing his departure to head up pub group Punch Taverns less than 48 hours after the new chief executive took up his post.



M&S confirmed it had made "positive progress" on finding his replacement.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Adviser - OTE £24,500

£22500 - £24500 per annum: Recruitment Genius: Inbound and outbound calls with...

Recruitment Genius: Business Development Executive / Sales - OTE £40,000

£18000 - £40000 per annum: Recruitment Genius: This fast growing Insurance Bro...

Guru Careers: Research Associate / Asset Management Research Analyst

£40 - 45k (DOE) + Benefits: Guru Careers: A Research Associate / Research Anal...

The Green Recruitment Company: Graduate Energy Analyst

£20000 Per Annum: The Green Recruitment Company: Summary: The Green Recruitm...

Day In a Page

Turkey's conflict with Kurdish guerrillas in Iraq can benefit Isis in Syria

Turkey's conflict with Kurdish guerrillas in Iraq can benefit Isis in Syria

Turkish President Erdogan could benefit politically from the targeting of the PKK, says Patrick Cockburn
Yvette Cooper: Our choice is years of Tory rule under Jeremy Corbyn or a return to a Labour government

Our choice is years of Tory rule under Corbyn or a return to a Labour government

Yvette Cooper urged Labour members to 'get serious' about the next general election rather than become 'a protest movement'
Singapore's domestic workers routinely exploited and often abused in the service of rich nationals

Singapore's hidden secret of domestic worker abuse

David Cameron was shown the country's shiniest veneer on his tour. What he didn't see was the army of foreign women who are routinely exploited and often abused in the service of rich nationals
Showdown by Shirley Jackson: A previously unpublished short story from the queen of American Gothic

Showdown, by Shirley Jackson

A previously unpublished short story from the queen of American Gothic
10 best DSLRs

Be sharp! 10 best DSLRs

Up your photography game with a versatile, powerful machine
Solved after 200 years: the mysterious deaths of 3,000 soldiers from Napoleon's army

Solved after 200 years

The mysterious deaths of 3,000 soldiers from Napoleon's army
Every regional power has betrayed the Kurds so Turkish bombing is no surprise

Robert Fisk on the Turkey conflict

Every regional power has betrayed the Kurds so Turkish bombing is no surprise
Investigation into wreck of unidentified submarine found off the coast of Sweden

Sunken sub

Investigation underway into wreck of an unidentified submarine found off the coast of Sweden
Instagram and Facebook have 'totally changed' the way people buy clothes

Age of the selfie

Instagram and Facebook have 'totally changed' the way people buy clothes
Not so square: How BBC's Bloomsbury saga is sexing up the period drama

Not so square

How Virginia Woolf saga is sexing up the BBC period drama
Rio Olympics 2016: The seven teenagers still carrying a torch for our Games hopes

Still carrying the torch

The seven teenagers given our Olympic hopes
The West likes to think that 'civilisation' will defeat Isis, but history suggests otherwise

The West likes to think that 'civilisation' will defeat Isis...

...but history suggests otherwise
The bald truth: How one author's thinning hair made him a Wayne Rooney sympathiser

The bald truth

How thinning hair made me a Wayne Rooney sympathiser
Froome wins second Tour de France after triumphant ride into Paris with Team Sky

Tour de France 2015

Froome rides into Paris to win historic second Tour
Fifteen years ago, Concorde crashed, and a dream died. Today, the desire to travel faster than the speed of sound is growing once again

A new beginning for supersonic flight?

Concorde's successors are in the works 15 years on from the Paris crash