A New Dawn For M&S?

A New Dawn for M&S? - at www.moneyweek.com - the best of the international financial media

Investors seemed unusually optimistic regarding Marks & Spencers' prospects following their trading statement released yesterday. The struggling retailer closed as a top blue chip gainer not a position it can be used to after nearly two years of falling sales.

So what did M&S shareholders like about yesterday's statement? For one, sales of general merchandise fell just 2.4% for the 14 weeks to July. CEO Stuart Rose emphasised that the "comfort you should take from that is that we've said clearly that our margin and cost targets remain unchanged and that our full-price sales are better than they've been for the past three quarters".

Moreover, M&S is also carrying 40% less stock in this year's summer sale, says Trevor Datson on Reuters.co.uk, while the sale will start 18 days later than last year.

Time to crack open the champagne? Not quite, says Lex in the FT. Rose may successfully be squeezing suppliers and stock control, yet the 11% drop in like-for-like non-food sales was even worse than the most bearish of forecasts. Food sales may have been good up 5% in the first quarter yet they should have been, following M&S's "purring" TV ads.

And as the company has now seen seven consecutive quarters of falling sales, only the "brave would buy now".

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