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Cheer as M&S women's clothing sales rise

THERE are tentative signs that Marks & Spencer chief executive Marc Bolland's calls for patience in his overhaul of the retailer may have been justified after it posted a rise in clothing sales, although there was unexpected weakness in its food business.

M&S, which has 24 stores and 22 Simply Food outlets in Scotland, said clothing sales rose 0.6% on an underlying basis in the 13 weeks to March 29, driven by "clear signs of improvement" in women's wear following last autumn's relaunch.

The chain does not usually split out sales figures for its clothing range from the wider general merchandise, category which was down 0.6% on a like-for-like basis.

Analysts warned that it still had more to do to show that it has stemmed its declining sales in the crucial women's wear sector.

Marc Bolland, chief executive of the 130-year-old retailer, said: "We are encouraged by women's wear, which is showing clear signs of improvement and performed ahead of clothing."

Clive Black, analyst at Shore Capital, said: "The heartbeat of the retailer is apparel and ladies' wear at that, and M&S needs to deliver stronger trade and cut out what tend to be small market downgrades.

"Despite distinctly dull trade, we do see progress in the proposition, its merchandising and execution, and we are encouraged by the company's comments on recent women's wear activity.

"However, there is clearly a lot more for M&S to do to stem market share decline in ladies' wear in the UK on a sustained basis."

M&S' general merchandise sales have been falling for three years, although the fall in the most recent quarter was smaller than the City had anticipated.

Richard Hunter, head of equities at Hargreaves Lansdown Stockbroker, said: "General merchandising is still under pressure, with some improvement in clothing somewhat overshadowed by a reduction in gross margins due to promotional activity."

M&S' food arm, which has been strong even as its clothing arm has struggled in the last few years, posted like-for-like sales growth of just 0.1%, suggesting it might be being hit by the supermarket price war. However, M&S pointed to differences in the calendar.

Mr Bolland said. "Our food business had another great quarter, especially considering the later timing of Easter. This marks our 18th consecutive quarter of growth.

"We continued to outperform the market with record sales around key events including Valentine's Day and Mother's Day."

M&S' share price reflected investor uncertainty about its recovery, with the stock closing the day at 442p, down 14p or 3.1%.

Under Mr Bolland, who was appointed in 2010, M&S has hired new senior personnel and launched a celebrity-backed marketing push to revive its fashion business.

M&S said: "Customers are responding well to our refocus on quality and style."

The figures could persuade investors to give Mr Bolland more time to lead his turnaround, although an initial 3% rally for M&S shares in early trading yesterday was wiped out as attention turned to the squeeze on margins caused by discounting rivals.

M&S' annual results are due to be published on May 20, with City forecasts recently pencilling in a 6% fall in profits to £623m for the year to March.

It will mean the company being overtaken for the first time by rival Next - a relative upstart at 32 years old - which announced profits of £695m last month.

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