Analysts and investors wonder if M&S has turned corner

Investors and analysts are asking if Marks and Spencer has finally put its troubles behind it as the high street retailer reported its first increase in underlying clothing and homeware sales for more than four years on Thursday.

Marc Bolland, chief executive, refused to be too bullish. He would say only that the first sales growth in general merchandise from stores open at least a year since Christmas 2010, alongside a continuing strong food performance, was a "big step forward".

But the 0.7 per cent increase in like-for-like sales of clothing and home furnishings in the three months to March 28 marks a decisive break with the most recent past.

Online sales also returned to growth in the final quarter, rising 13.8 per cent in the three months to March 28.

M&S has been promoting heavily, although Mr Bolland insisted that the level of discounting was "slightly lower" than it was a year ago, compared with a market where special offers went up.

"It was not done through discounting," he said of the improved general merchandise performance. "Full price sales have been higher."

Analysts cautioned that while the news was positive, it was too early to declare that the worst was over for the retailer.

Tony Shiret, an analyst at Espirito Santo, said: "I like the story, but I still think its impossible to read too much into newsflow covering such a short period."

Richard Hyman, an independent retail analyst, asked: "Is this the recovery of the icon of UK retail? In a word, no. At least, not on the basis of one tiny snapshot measured against very weak comparatives."

As well as delivering an improvement in general merchandise sales, the gross margin - the difference between the price at which retailers buy and sell stock - will also improve by between 1.5 and 2 percentage points in the year just ended.

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Mr Bolland insisted the retailer will be able to navigate these changes without jeopardising the quality that he believes is winning back customers.

"We will have the same standards in terms of our ethical sourcing and quality standards of manufacturing," he said.

M&S is now looking to its spring and summer collections. Some see a £199 suede skirt in its Autograph collection as a symbol of how far it has turned round its business.

Some 3,500 people have registered to be informed when the skirt arrives. The retailer has ordered five times as many as originally planned, and crucially it has asked those registering to state their size, so that it can order more accurately.

Having enough stock in store and available online, in the right sizes, will be a crucial test of M&S's progress after it ran out of popular items in previous years.

But Mr Shiret believes autumn will be the key season.

"Even without being able to determine whether it has finally sorted itself out, M&S should be able to deliver decent figures this year because the comparatives are so weak, because of last autumn's very warm weather," he said.

With the pressure off Mr Bolland, some headhunters suggest it might be an opportune moment for him to consider his next move - particularly as much of the "heavy lifting", as he has described it, is now done.

But he insisted: "I'm enjoying my role and there is more work to do . . . We have got great plans ahead of us."

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