Marks and Spencer continued its revival with unexpectedly strong Christmas sales figures, but the store chain cautioned today that the consumer spending spree is unlikely to last.
M&S delivered a bumper 10.4 per cent increase in clothing and homewares sales, far exceeding the five per cent pencilled in by analysts.
Along with a 5.4 per cent rise in food sales, this meant total like-for-like sales in Britain in the seven weeks to January 12th were up 8.3 per cent, far higher than anticipated.
M&S shares, the best performer in the FTSE 100 index in 2001, rose 1.67 per cent to 366p, and a string of brokers raised their profit forecasts.
But chairman and chief executive Mr Luc Vandevelde, brought in to engineer M&S's recovery, said the boom could not last. "I can't possibly imagine we are going to continue trading at this level," he told reporters.
M&S has undergone a radical transformation to get its recovery on track. It has sold or closed foreign stores, improved the look of the domestic ones, replaced almost its entire board, sacked domestic suppliers, brought in new designers and lowered its prices.
"The margin improvement has been well executed, which is the basis for profit recovery," said Mr Tony Shiret, an analyst at Credit Suisse First Boston.
The company gave the first signs of recovery after years of poor performance in October with the first quarterly sales rise in three years.
Mr Vandevelde said he was encouraged by the strong results, which led him to believe the group's recovery programme was on track. He said the performance of womenswear was particularly strong, helped by the new ‘Per Una’ range of younger fashion designed by ASDA's former designer Mr George Davies.
But he said the company's current 10 per cent growth in sales of clothing and homewares was likely to ease off by mid 2002 or the autumn.