Marks and Spencer reports rising sales

7th July 2010, Comments 0 comments

British retailer Marks and Spencer raised sales in its first quarter, but warned on Wednesday about the impact of the government's austerity budget measures, notably a rise in sales tax.

The company, seen as a barometer of consumer sentiment in Britain, said in a trading update that group sales increased by 4.4 percent in the 13 weeks to July 3, compared with the same period of the previous year.

In the group's home market Britain, sales rose by 3.6 percent on a like-for-like basis, which strips out the effect of new floor space.

"Marks and Spencer has delivered another good sales performance in the first quarter, continuing the progress made by the team over the previous year," said new chief executive Marc Bolland in a statement.

"We have continued to grow market share across all parts of the business as customers recognised the strength of the Marks and Spencer brand and the great quality and value it represents."

Bolland added that the British government's 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," added the chief executive.

The coalition government last month delivered an emergency budget which contained a package of higher taxation and spending cuts as it sought to slash the country's enormous public deficit.

Finance minister George Osborne announced a hike in taxation on goods and services, lifting value-added tax (VAT) to 20 percent from the current 17.5 percent in January 2011.

Equities analyst Richard Hunter, at Hargreaves Lansdown stockbrokers, described the statement as "solid".

"The update is solid if a little unexciting, with sales marginally outpacing expectations," Hunter noted.

Dutchman Bolland, who was formerly boss at British supermarket chain Morrisons, took over the reins from Stuart Rose in May. Rose remains chairman of the prestigious clothing-to-food retailer.

© 2010 AFP

0 Comments To This Article