Marks and Spencer stems decline in clothing and homeware sales

Marks and Spencer's underlying sales of clothing and homewares rose for the first time in almost four years, helped by the popularity of a 1970s-style suede skirt that has been a favourite of the fashion press.

It is the first time for 15 quarters that M&S has not reported a decline in sales of clothing and homewares from stores open at least a year, and the news sent M&S shares up more than 5 per cent to 558.65p - the biggest gainer among FTSE 100 stocks.

Like-for-like sales of clothing and home furnishings rose 0.7 per cent in the three months to March 28, M&S said on Thursday, as it put the problems with its online operation that have plagued it for the past year behind it.

"It's a step-by-step journey, and we are taking steps in the right direction," said Marc Bolland, chief executive.

Mr Bolland said the performance was helped by all its general merchandise departments - womenswear, menswear, childrenswear and home furnishings, which all registered positive sales.

In womenswear, he said customers had been impressed by improvements in the fashionability, fabric and make-up of its clothes.

The Autograph range enjoyed a "nearly double-digit" improvement in sales, or a "high single-digit" increase in like-for-like sales in the quarter. The Limited range, M&S's younger, fast fashion collection, experienced a similar sales pattern.

"We have been bang on trend," said Mr Bolland.

He said there had been strong interest in the suede skirt - worn by celebrities such as Alexa Chung - which will be available to buy in the next few weeks for customers who had pre-ordered.

The popularity of the skirt had been such that its launch has been brought forward from May, and Mr Bolland said he was confident that M&S would escape some of the stock availability problems that have hit popular styles in the past.

The fourth-quarter general merchandise performance is an improvement on the third quarter, when M&S reported a worse than expected 5.8 per cent decline in like-for-like clothing sales following problems at its distribution centre in Castle Donington.

Sales from its online platform, which suffered teething problems after its £150m relaunch a year ago, returned to growth, with sales up 13.8 per cent in the final quarter.

M&S also said its gross margin - the difference between the price at which it buys and sells goods - for general merchandise would increase by between 1.5 and 2 percentage points, in line with expectations, after it brought in Mark and Neal Lindsey, the architects of rival Next's supply chain.

But not all analysts were convinced that M&S had turned a corner in clothing.

Tony Shiret, analyst at Espirito Santo, said: "There is likely to be some debate about how the general merchandise sales figure has been achieved in light of highly visible late-year promotional activity."

Bryan Roberts, director of retail insights at Kantar Retail, added: "While the general merchandise numbers might be cause for muted celebration, the overall verdict is that the stars have aligned for a single quarter. We await consistent repetition of this feat before we can proclaim a recovery."

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The improving picture in clothing and homewares is a fillip for Mr Bolland, who has come under pressure from some shareholders over a lack of progress in clothing.

With sales stabilising and M&S shares at their highest level since January 2008, some headhunters suggest it could also be an opportune moment for Mr Bolland to think about his next career move. He will have been chief executive for five years in May.

However, Mr Bolland insisted on Thursday: "I really enjoy this role . . . and there is more to do."

International sales fell 3.8 per cent in the final quarter, hit by conditions in Russia, Ukraine and Turkey, and the weak euro.

However, the improvement in the gross margin, and a smaller than expected increase in costs, is expected to lead to small profit upgrades. Citi, the company's joint broker, is forecasting a £10m increase in pre-tax profit in the year to the end of March, to £650m.

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