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Marks & Spencer (MKS) has reported a 0.5% fall in first quarter like-for-like sales, as the timing of Easter and improved performance in general merchandise led to a better overall sales performance.

Headline sales for the group were up 2.7% to £2.53bn in the 13 weeks to 1 July 2017, a rise of 1.8% on a constant currency basis.

Total UK sales were up 2.6% to £2.26bn as clothing and home sales fell 0.5% to £852.1m and food sales grew 4.5% to £1.4bn in the period.

General merchandise sales were down 1.2% on a like-for-like basis, which represents a significant improvement from the 5.9% drop in the fourth quarter. Full price sales were up 7%, as M&S reduced the number of promotions and there was no clearance sale in the quarter compared with one last year.

Food was down 0.1% on a like-for-like basis, up from a 2.1% decline in the fourth quarter of its previous financial year. M&S stated: “We are focused on tightening execution through improving ranging in store and on delivering stronger promotions in a competitive market.”

The timing of Easter is estimated to have increased revenue growth in Food by 0.7% and in Clothing & Home by 0.6%.

International revenue increased 3.8% (down 4% in constant currency). It has now closed 28 of 53 stores in the owned markets it has announced it is exiting.

CEO Steve Rowe said: “Trading in the first quarter was in line with our expectations and we are on track with delivery of the plan we announced last year.

“I am pleased that we continue to grow full price sales in Clothing & Home, with reduced discounting and no clearance sale in the quarter. In our Food business, we delivered strong growth from new Simply Food openings, and are prioritising better ranging and stronger promotions.”

Morning update

Retails sales improved by 1.2% on a like-for-like basis year-on-year in June 2017 as rising prices and the warm weather boosted retail sales, according to the BRC-KPMG Retail Sales Monitor.

During the five weeks from 28 May to 01 July 2017 total retail sales grew by 2% year-on-year, up from a 0.2% rise in June 2016.

Like-for-like growth of 1.2% is up from a like-for-like decline of 0.5% in June 2016.

Over the three months to June, food sales increased 3.6% on a like-for-like basis and 4.7% on a total basis, which represents the strongest 3-month average since February 2012.

Over the three-months to June, non-food retail sales in the UK increased 0.9% on a like-for-like basis and by 1.2% on a total basis, above the 12-month total average growth of 0.6%

Online sales of non-food products grew 10.1% in June, compared to 9% a year earlier. Over the three-months to June, online sales of non-food products grew 8.4%, while in-store sales declined 0.7% on a total basis and 1.2% on a like-for-like basis.

Helen Dickinson, chief executive of the British Retail Consortium commented: “The arrival of summer provided a welcome pick-up to sales growth in June, particularly to non- food categories which saw a reversal in fortunes after a prolonged period of sluggish growth.

“The six-month average, buoyed by June’s strong performance, now paints a slightly rosier picture for retail sales. But on closer inspection the year on year numbers belie the fact that rising food prices are responsible for the main component of growth and have prompted more cautious spending towards discretionary non-food items.

“Looking ahead, there’s a question mark over whether this spending momentum will last, as household expenditure is increasingly squeezed from rising inflation and slowing wage growth. The reality is that retailers’ efforts in absorbing mounting cost pressures into their margins are already being tested, so the Government must have the consumer front of mind as it enters the UK’s trading negotiations with the EU, to avoid any further cost increases to retailers and their customers.”

Joanne Denney-Finch, chief executive, IGD added: “According to the Met Office, England enjoyed the second equal warmest June on record. Alongside rising inflation, this helped the food and grocery sector to experience a three-month growth trend that is now at its highest since March 2013.

“The inconclusive election result has introduced further uncertainty and this will test the sector’s momentum. However, there has also been a further injection of shopper patriotism with 47% saying it is very important to support British producers, up from 41% last September.”

Own label household goods manufacturer McBride (MCB) has issued a trading update for the year ended 30 June 2017.

It said adjusted operating profit for the full year is forecast to be in line with expectations despite “challenging” trading conditions in the second half of its financial year.

“Against that backdrop, McBride’s ongoing initiatives to manage gross margins and maintain close control over its overhead cost base were effective in mitigating the impact of competitive markets and raw material price inflation,” it stated.

Underlying Group revenues for the year were 3.8% lower than the prior year on a constant currency basis. The impact of McBride’s customer reduction project accounted for a further 2.1% of sales reduction, meaning that total group revenues on a constant currency basis were 5.9% lower than the prior year.

The group will announce its preliminary results for the year ended 30 June 2017 on 7 September.

On the markets this morning, M&S shares have dipped another 1.7% to 333.3p so far this morning, while McBride is down 4.9% to 178.75p.

The FTSE 100 has opened down 0.2% at 7,356.6pts, but a number of larges consumer firms are coming under early pressure.

Other fallers include Tate & Lyle (TATE), down 1.2% to 660p, British American Tobacco (BATS), down 1.1% to 5,151p, Associated British Foods (ABF), down 1% to 2,936p, Cranswick (CWK), down 0.9% to 2,774p, Diageo (DGE), down 0.9% to 2,263.5p and Reckitt Benckiser (RB), down 0.9% to 7,604p.

Conversely the supermarkets are on the rise, with Tesco (TSCO) up 1.2% to 173p, Morrisons (MRW) up 1.1% to 245.5p and Booker (BOK) up 1% to 190.9p.

Yesterday in the City

A late market rally helped the FTSE start the week on the front foot, closing 0.3% higher at 7,370pts yesterday.

With no grocery market news of note yesterday it was a relatively subdued day of trading for the sector.

Risers included Tate & Lyle (TATE), up 1.1% to 668p, Diageo (DGE), up 1% to 2,284p, Morrisons (MRW), up 0.7% to 242.8p and SSP Group (SSPG), up 0.7% to 486.5p.

There were a couple of notable fallers, including Ocado (OCDO), which continues to fall away from its year-long share price high of 340p recorded in early June after falling another 2.8% yesterday back to 276.1p.

Marks & Spencer was also 1.6% down to 339p ahead of its first quarter trading update this morning.

Other fallers included Premier Foods (PFD), down 3% to 40.5p, PureCircle (PURE), down 2.8% to 350p, Hotel Chocolat (HOTC), down 2.1% to 336.8p and Majestic WINE (WINE), down 1.8% to 312.3p.

The day’s risers also included Nichols (NICL), up 3.6% to 1,911p and Total Produce (TOT), up 1.3% to 193.5p.

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