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Cheers all round at M&S as fashion sales turn the corner

It’s been a long time coming. UK-based retail giant Marks & Spencer had good news on its clothing performance Thursday with a sales lift that took many by surprise. After all, it was the first rise in more than three years.

The company had battled economic woes in some international markets and weather that seemed determined to frustrate its growth efforts at home. But it made it and early Thursday its shares began to climb as a result.

OK, let’s pause for a minute. There was only a 0.7% rise in comp sales for its beleaguered general merchandise unit. But those closely-watched clothing sales were up 1.2% in the quarter and up 0.6% on a comps basis. This came as M&S said customers responded to changes in “product quality and styling” and as it sold more full-price items, especially womenswear. Total GM sales, which includes furniture and homewares, rose 1.3%.

M&S said its new spring/summer ranges have been “well received” by customers, “as evidenced by strong improvement in customer research scores, as well as great fashion press coverage, including that of our iconic suede skirt.” For those who don’t know, that’s its 1970s-style suede midi skirt that has been one of the fashion press hits of the new season.

The result of all this was that M&S reported an overall Q4 sales rise to March 28 of 1.9% year-on-year, excluding VAT. Total UK sales were up 2.7%, as online sales drove 13.8% higher.
While, international sales excluding VAT fell 3.8%, the fall was understandable in the circumstances as the retailer had to contend with economic problems in Russia, Ukraine and Turkey and the weakness of the euro.

Even with that, M&S said its GM gross margin improvement was on track with its guidance unchanged at a rise of between 150 and 200bps.

Chief executive Marc Bolland said: “We have made strong progress over the quarter. We continued to deliver on general merchandise gross margin, and are pleased that we have achieved this while also improving general merchandise sales. M&S.com has returned to growth, as planned, with further improvement in customer metrics.”

He added: “In line with our plan for the year, we promoted less and focused more on full price sales. However, this was partly off-set by more stock going into the Christmas sale as a result of the unseasonal conditions through the autumn/winter season.”

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