M&S chief upbeat as high street giant gains market share

Marks & Spencer yesterday brushed aside fears of a spending slowdown to record a seventh consecutive quarterly rise in underlying sales and said it had faith in the British high street.

The retail stalwart, which was also holding its annual shareholder meeting, said like-for-like sales grew by 1.7 per cent in the 13 weeks to 2 July - just ahead of City forecasts.

M&S grew its share of the food market after launching a range of healthy eating options, while customers also snapped up party food to help celebrate the royal wedding. It also halted a recent decline in non-food sales, including clothes and homewares. Brazilian-cut knickers, selling as part of a three-for-10 offer, were said to be a best-seller during the quarter.

News of recent trading came as the group fended off a shareholder rebellion at its AGM, despite being grilled over executive pay and bonuses.

Shareholder advisory group Pirc had raised concerns over the recruitment incentives offered to new chief executive Marc Bolland and finance director Alan Stewart.

In the end, the remuneration report was carried with just under 97.1 per cent of all shares cast.

The 127-year-old group is seen as being better able to cope with a squeeze on spending thanks to its older and more affluent customer base.

Bolland admitted that consumer confidence was low, but said it had not deteriorated over the past couple of months.

"We have strong belief in the high street," he said. "What we are seeing is that people are keen to protect their summer holidays and, therefore, are reducing their spend in some areas, they are cutting back on dining out."

This was playing to M&S's strengths in premium food, he said, where 500 products were launched during the firm's financial first quarter, including a new Italian range.

Like-for-like general merchandise sales, spanning clothing, footwear and homewares, were flat, while food sales grew by 3.3 per cent.

Other best-selling lines included an Autograph suit modelled by former footballer Jamie Redknapp and maxi dresses selling for 49.50.

"M&S has delivered a good performance in challenging conditions," added Bolland, whose strategy is focused on product innovation, as well as expanding online and abroad.He is also working to improve stores, marketing, logistics and technology.

The group, which serves some 21 million Britons a week from more than 700 stores and has about 350, mainly franchised, outlets overseas, said its guidance for the full year was unchanged.

M&S shares dipped 9.2p to close at 363.8p - below the 400p level of billionaire Sir Philip Green's indicative takeover proposal in 2004.

Arden Partners analyst Nick Bubb said: "Given how good April was, plus the earlier summer sale, we had hoped for more like 2 per cent like-for-like (growth) in general merchandise in Q1."