Marks & Spencer boss Sir Stuart Rose eased pressure on the high-street retailer yesterday by announcing a smaller-than-expected fall in sales.
Sir Stuart, who has faced flak because of recent trading and corporate-governance issues, said there were signs of an improved trend in its performance but added that he remained cautious about prospects for this year and next.
Like-for-like sales in the UK dropped 1.4% in the 13 weeks to June 27, bettering the previous quarter and forecasts in the City.
M&S shares jumped 3.76% to 317.5p, while Sir Stuart’s comments about a more stable picture for consumer confidence boosted rival stocks including clothing and homeware retailer Next, which added 3.88% at £15.26.
City firm Numis Securities added £26million to its M&S profit forecast after the update, but its estimate for a surplus of £550million in the year to March is still down on this year’s £604million.
Numis believed the warmer weather helped trading, particularly in clothing after total sales in the category improved by 1.4% and M&S grew market share.
M&S’s sales troubles caused full-year profits to tumble 40%, while it cut its annual dividend by 33%, the first such move since 2000.
Like-for-like UK sales for the full year past fell 5.9%, including a 6.9% drop in general merchandise and a 5% decline in food, but the fourth quarter suggested a moderately better performance, with sales declines easing to leave sales down 4.2% on a same-store basis.
Yesterday’s figures showed like-for-like sales were down 2.4% in general merchandise, with food much better than expected after a fall of 0.5%.
Sir Stuart said: “We are pleased with the improving trend in our performance. This demonstrates that the actions we are taking are working.
“Consumer confidence appears to be stabilising, however, we remain cautious about the outlook for the remainder of this year and next year and will continue to run the business accordingly.”
M&S is still feeling the heat over Sir Stuart’s role and other governance issues.
Shareholder body Pirc reiterated calls this week for chairman and chief executive Sir Stuart to split his role, branded as a “dangerous concentration of power” when combined.
He has said he will step down in July 2011 with a successor in place, but this is not soon enough for many disgruntled investors.
Meanwhile, the group was also forced to make a concession on bonuses following pressure from shareholder bodies.
It said Sir Stuart and marketing chief Steven Sharp were to forgo one-third of their long-term bonus awards in light of concerns raised by the Association of British Insurers.
The issues surrounding the chain could make for an interesting AGM with shareholders next Wednesday, in London.