A nice surprise from M&S

By ALEX BRUMMER, CITY EDITOR
Updated:

 

Marc Bolland clearly has the gods smiling upon him. Not only does he have a £15m contract as chief executive of Marks & Spencer, he is also delivering.

Former chairman Sir Stuart Rose smoothed the path for him with his downbeat assessment of prospects for the nation's favourite shopping chain in the light of recession.

But after the terrible news from the High Street in recent weeks with everyone from Home Retail Group to Dixons having a ghastly time, the M&S performance for the final quarter of the year must be considered very encouraging.

Analysts predicting a 2.5% drop in same store sales have satisfyingly been proved wrong after Bolland unveiled a 0.1% overall sales rise.

Admittedly, the core non-food offering was off 3.9%. But even this must be considered fine in the current constrained economic conditions.

What the M&S resurgence seems to suggest is that there is something of a flight to quality going on.

M&S is benefiting from the stay-at-home food shopper seeking a bit a luxury, at a reasonable price, and clothing shoppers trusting M&S garments not to fall apart.

Interestingly enough, it is thought that the discounters like Primark, who one might have expected to be doing well in current conditions, are having a much harder time.

Bolland has yet to place his full stamp on M&S but his food background clearly helps in keeping it ahead of the pack.

The company also seems to have rediscovered the kind of innovation which made it such a force on the high street for decades with items such as Insolia high heels and Stormwear men's clothing.

Old stalwarts of tights and lingerie continue to be market leaders. Obviously Bolland is cautious about the future given the pressure on the real incomes of consumers, the potential for an interest rate hike and surging cotton prices.

But one trusts the better-than-expected outcome in 2010-11 will give him and his team the confidence to keep investing, with the internet and overseas expansion the current priorities.

Clearly investors are greatly relieved and the shares led the FTSE 100 with a 6% rise. It is a long time since that has happened.

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