M&S to hire 4,000 staff and expand overseas

Lord Burns took the reins as the chairman of Marks & Spencer yesterday as the company delivered a big jump in sales and announced it would hire 4,000 more people in its stores to cope with strong demand for its revamped clothing and homewares ranges.

Like-for-like sales leapt 8.2 per cent in the three months to 1 July. The trading update came as the retailer held its annual meeting in Birmingham where Paul Myners handed over to Lord Burns, a former permanent secretary to the Treasury, who also chairs the high street bank Abbey. The mood was generally upbeat, with several private shareholders lauding Mr Myners' performance and expressing their sadness at his departure.

Despite the jump in sales and market share, the chief executive, Stuart Rose, who previously said "one swallow doesn't make a summer", was still reluctant to use the "R-word". "I have said I am not going to call the recovery until we get into Christmas, but as every quarter makes progress we will get closer," he said. He cautioned that sales growth would slow in the coming quarters as the year-on-year comparisons get tougher, but was confident that M&S had "enough momentum to keep the growth coming".

The strong performance - the fourth consecutive quarter of growth - has given Mr Rose the confidence for a new overseas push. While M&S is in the middle of refurbishing its 42 UK stores, nine of which have been completed, it also intends to open up to 30 new franchises abroad this year. The company is also rolling out "Simply Food" branded stores in the UK and is trialling the format at nine BP petrol stations.

Like-for-like general merchandise sales rose 10.5 per cent in the first quarter, underpinned by a 10.7 per cent rise in clothing, while home furnishings surged by 23.3 per cent. Food sales were up 5.8 per cent. Easter added 0.8 per cent to sales, while effects from the World Cup were negligible. The finance director, Ian Dyson, said: "We are not a supermarket selling lots of beer."

Strong performances came from the M&S women's and men's ranges, as well as George Davies's popular Per Una range in womenswear. Even the struggling children's clothing section is now "flatlining" and Mr Rose expects to see further improvement by the autumn, thanks to a new range of girls' clothing, Lola, which instantly sold out in stores where it was introduced.

In a sign that a recovery is progressing across the retail sector, despite continuing cost pressures, Mr Rose said the need to cut prices to lure customers back into stores was easing. "We are seeing a decline in deflation so there won't be the same deflationary pressures as you had in the past. Indeed, there may well be some inflationary pressures."

On average, prices at M&S have come down by 8 per cent over the past three months.