“Our customers are a bit older and what we see clearly from
our market data is that older customers are concerned about cuts but better
prepared than younger customers,” Chief Executive Marc Bolland told reporters
on Thursday.
Echoing comments this week from Tesco and J Sainsbury,
Britain’s No. 1 and No. 3 grocers respectively, Bolland said he did not expect
government spending cuts, to be unveiled on Oct. 20, to tip the economy back
into recession.
“No, we don’t expect a double dip. Yes we expect customers
to have a more difficult trading environment but we expect to be well
positioned,” he said.
Britain’s biggest clothing retailer, which also sells up market
foods and home wares, said underlying sales increased 5.3 percent in the 13
weeks to Oct. 2, its fiscal second quarter.
That was the fourth consecutive quarterly rise, up from 3.6
percent in the first quarter and against analysts’ average forecast of 3.2
percent in a company poll.
But despite topping forecasts M&S, which serves 21
million Britons a week from over 650 stores and has about 300 shops abroad,
said its full-year financial expectations were unchanged as the better trading
was offset by rising operating costs.
The firm said these would be toward the top end of its
forecast range of up 4 to 5 percent because of a step-up in marketing activity
and higher sales volumes.
“We are facing increased commodity prices and significantly
tougher comparatives in the second half. As a result we remain cautious about
the outlook for the remainder of this year and next,” it said.
Shares in M&S, which have lagged the STOXX 600 European
retail index by 13 percent this year, were flat at 390.9 pence at 0841 GMT,
valuing the firm at about 6.14 billion pounds.
Citi analysts said M&S shares already trade at a premium
to rivals, and saw no change to analysts’ full-year consensus profit forecast,
which stands around 702 million pounds ($1.1 billion), according to Thomson
Reuters.
British bicycles to car parts retailer Halfords on Thursday
posted a 6.3 percent drop in second-quarter underlying sales, although
Sainsbury said on Wednesday it thought austerity measures were already embedded
into shopping habits.
M&S said its growth was driven by a 70-basis-point
increase in market share in clothing, helped by new products such as the “2
sizes bigger” bra and “Miracle” crease resistant linen.
Food market share also rose 10 basis points, while online
sales surged 49 percent.
Like-for-like British general merchandise sales, which
include clothing and home wares, jumped 7 percent, while food sales rose 3.7
percent on the same basis.
Group sales were up 6.5 percent, including a 6.2 percent
increase from international stores.
Bolland, who joined in May from grocer Wm Morrison, will
outline his thoughts on future strategy alongside interim results in November.
He gave no hints on this beyond stating his plan was for “evolution
not revolution.”
