M&S says confidence 'stabilising'

M&S remains cautious about the rest of 2009 and the whole of 2010

Marks and Spencer has said that "consumer confidence appears to be stabilising", although it remains cautious about the next 18 months.

Its UK like-for-like sales, which exclude new stores, fell 1.4% in the 13 weeks to 27 June, with food down 0.5% and general merchandise down 2.4%.

In the previous three months, UK like-for-like sales had fallen by 4.2%.

"The good news this year is that there is more visibility about the sales level," M&S chief Sir Stuart Rose said.

"This time last year it was a very difficult situation because we were headed downhill.

"But it's very hard to call whether this is a plateau, whether this is a continuing decline, whether there's any movement upwards. So I'm not saying there are any green shoots, I'm just saying this is a stable situation - so far, so good."

M&S share price

M&S said total group sales - including new stores - rose 2.9% in the period, with total UK sales up by 1.7%.

Richard Hunter, head of UK equities at Hargreaves Lansdown Stockbrokers, said the decline in M&S's UK like-for-like sales was smaller than expected, and was the latest sign from retailers that the spending downturn was easing.

"The phrase 'challenging outlook' is increasingly being replaced by a 'stabilising consumer' and M&S is the latest to add to this view," he said.

Leadership row

Last week, Sir Stuart offered to waive a slice of his long-term bonus award, an entitlement to shares worth £1.16m.

The shares were awarded on 11 June under a performance-related three-year bonus plan, but M&S said it had faced an "unexpected" shareholder reaction.

However, Sir Stuart is still set to come under pressure at the retailer's annual general meeting (AGM) next week over his combination of the roles of chairman and chief executive.

The combination of the two roles goes against corporate governance guidelines, and three shareholder advisory groups have recommended that M&S shareholders back a resolution at the AGM calling for an independent chairman to be appointed by July 2010.

But Sir Stuart told the BBC that he still intended to stick to his plan to leave in 2011.

"We've laid our story out quite clearly," he said. "We'll have a new chief executive in 2010 and I will leave the business by July 2011."