British retailer Marks & Spencer (M&S) joined rivals in sounding cautious about prospects for consumer spending, even as it reported an improving sales trend for the fifth quarter in a row that beat forecasts.
The 126-year-old clothing, food and homewares group said yesterday that sales at British shops that have been open for at least one year surged 5.1 percent in the 13 weeks to March 27, its fiscal fourth quarter.
That beat analysts’ average forecast of 1.7 percent in a company poll, helped by strong demand for formalwear and knitwear and a boost from the first day of the post-Christmas sale, which was included in third-quarter results last year.
M&S said full-year pretax profit would be between £620 million and £630 million (US$945 million to US$960 million), in line with analysts’ consensus forecast, as a smaller-than-expected fall in profit margins was offset by a rise in operating costs.
The group said gross profit margins would be broadly level in the 2010 to 2011 financial year, while operating costs would rise between 4 percent and 5 percent, partly due to planned new selling space.
“We have weathered the immediate impact of the recession, but remain cautious about the outlook for 2010/11 given the current challenging environment,” it said in a statement.
Separately, Swedish fashion chain Hennes & Mauritz (H&M) AB yesterday said profits rose 45 percent in the first quarter, helped by higher sales and an increased number of stores.
Europe’s No. 2 fashion retailer said net profit in the three months ending on Feb. 28, its fiscal first quarter, increased to 3.7 billion kronor (US$511 million) from 2.6 billion in the same period a year ago.
Sales, excluding value-added tax, rose 7 percent to 24.8 billion kronor from 23.3 billion. However, the budget chain said sales in local currencies increased by 13 percent and rose 2 percent when excluding the impact of new store openings.
“The spring collections have been well received,” H&M said in a statement. “In view of the continued weak economy during the quarter, the company considers that sales have been satisfactory.”
The bottom-line result and the company’s closely watched gross margin, which rose to 61.9 percent from 56.6 percent, were better than analysts’ expectations, while sales were lower than forecast.
H&M had 1,992 stores at the end of February, up from 1,748 a year ago.
It said new store openings in South Korea and Israel had been met with great interest during the quarter and that it plans to open 73 new stores in the second quarter, mainly in the UK, China, Norway, Denmark and Germany.
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