Better marks for Marks & Spencer

It was bad, but not as bad as the City had expected. Marks and Spencer said yesterday underlying sales fell just 4.2% in the last three months. Bloomberg's analyst survey had forecast a 6.8% revenue slide, so it was no surprise that the shares rang up a 12% gain on the news. Further, the trading update "has given Sir Stuart Rose some much-needed breathing space after a spate of shareholder sniping over corporate governance", said the FT's Andrea Felsted and Kate Burgess.

The group "was able to announce it had been swimming against the recessionary tide rather more strongly than anyone thought", said Jeremy Warner in The Independent. M&S "seems to be getting a grip once more" with the new Portfolio womenswear range, and the "dine-in" food promotions are a step in the right direction.

The outlook for M&S

But conditions on the high street aren't improving, said The Wall Street Journal's Molly Neal, and "Sir Stuart's challenge is to hang onto market share and reverse the sales slide without sacrificing margin". Further, if Rose sees no economic recovery within two months, "it's hard to see how M&S can avoid chopping a dividend that was raised 23% last year", said The Guardian's Nils Pratley. As for corporate governance, "last year's move to make Sir Stuart both chairman and chief executive was appallingly handled", said the FT's Lex. "Given the dog's breakfast M&S has made of recent successions, it's imperative the next one is handled right."

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MKS : 306p; 12m change -24%