Marks & Spencer notched up its third quarter of sales growth in a row today as the retail giant’s recovery gained momentum.
The group said UK same-store sales rose 3.6% in its first quarter, with food up 1.5% and general merchandise ahead 6% – results which would have been even higher with the timing of Easter stripped out, according to M&S.
But Marc Bolland – the group’s newly appointed chief executive – said UK government austerity measures posed a threat to consumer spending.
“Following the recent Budget and the actions proposed to reduce the national deficit, including the increase in VAT, we are cautious about the outlook for consumer confidence and spending and continue to manage the business accordingly,” he said.
The group still believes the wider economy will avoid a double- dip recession, although it is braced for pain on the high street from spending cuts and tax hikes.
Mr Bolland said: “It’s too early to see the effects (of the Budget) at the moment, but we will certainly see the effects coming through in the next three quarters.”
The latest results point to a slight slowdown on a particularly impressive final quarter, when sales rose by a far-better-than-expected 5.1%.
However, M&S said the first quarter to July 3 excluded the benefit of Easter timing this year, which, when adjusted for, would see like-for-like sales around 0.9% higher – at 4.5% growth.
Underlying comparable food sales growth would have been around 2.9% and general merchandise at 6.4%.
The group confirmed that profit margins remain flat.
It marks a positive inaugural set of trading figures for Mr Bolland, who joined on May 1.
The former Morrisons chief executive is currently on an induction period as part of a handover with outgoing boss Stuart Rose.
He said he had spent the past nine weeks visiting stores, suppliers and international operations as he gets his feet under the table, with plans to announce his strategy at the interim results in November.
Mr Bolland is also preparing for his first annual general meeting with M&S next week, when the group will face investors.
Pay is likely to be high on the agenda once more, with packages for Mr Bolland and Sir Stuart under scrutiny.
The group is also recruiting for a new finance director to replace Ian Dyson, who dealt an early blow to Mr Bolland by announcing his departure to head up pub group Punch Taverns less than 48 hours after the new chief executive took up his post.
M&S confirmed it had made “positive progress” on finding his replacement.