LONDON -- Shares in Marks & Spencer (MKS 1.51%) have risen 4% to 399 pence as of 8:50 a.m. EDT following the release of the high-street retailer's trading statement for the fourth quarter, which saw the strongest quarterly sales growth in the last two years.
Group sales increased 3.1% year on year, with total U.K. sales averaging out at a 2.6% rise. Another strong performance from its food operations, which saw a 6.3% lift (helped by its biggest-ever Easter week), more than offset the 2.2% drop-off in general merchandise. It was a similar story for like-for-like sales in the U.K., which saw a marginal increase of 0.6% as food soared 4% and general merchandise fell 3.8%.
Chief executive Marc Bolland commented:
We are working hard on improving our performance in General Merchandise and, despite difficult trading conditions, we made progress in our operational execution. We delivered an excellent result in Food, with performance well ahead of the market, as customers continued to trust us for provenance and quality. We are increasingly seen as the destination shop for special occasions.
An increased push in multichannel sales saw a 22.9% rise in the operations year on year, helped by increased participation in M&S' click-and-collect offer "Shop Your Way," while mobile sales soared more than 70% compared with the same period last year thanks to an improved mobile-shopping experience implemented.
Elsewhere, international sales grew by 7% following a good performance by its franchise business in the Middle East, while key markets in India and China continued to trade strongly. Management also highlighted the performance of its European stores, stating, "Despite the macro-economic issues in some of the legacy markets, our performance in Europe improved in the quarter."
So Marks & Spencer appears to be making ground in its directive to become an international multichannel retailer despite the continued decline of its clothing operations. However, Bolland and the rest of the management team are addressing this with "selected tactical offers," and they revealed in this morning's update that customers are responding well to "better editing" of its spring and summer range. If they can return the general merchandise department to former glory, coupled with its excellent food division, then Marks & Spencer, on a prospective yield of 4.5%, might just return to prominence -- both on the high street and in investors' eyes.
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