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M&S - good Q2; customers are returning to quality

07
Oct '10
Marks and Spencer Group Plc announced Trading Statement for Q2, 2010/11.

Marc Bolland, Chief Executive said:
“Marks & Spencer has had a good second quarter, growing market share across all parts of the business. Customers are returning to quality. In Food they are responding well to our better value and innovation, and in Clothing are increasingly choosing M&S's great fashions and quality that lasts.”

Trading summary
Clothing market share was up 70bps to 10.3%1 with growth across all areas. We delivered stronger fashions for our customers, keeping our ranges fresh throughout the summer. New styles, fabrics and colours led to better choice with products to suit every budget.

We continued to offer great value for money, while delivering improved fit and quality. We introduced a number of innovative new products such as our new '2 sizes bigger' bra and 'Miracle' crease resistant linen. With economic uncertainty putting a strain on household budgets, customers are returning to quality in areas such as men's suits and knitwear. We have also seen a positive response to increased investment in marketing. Our latest advertising campaign has driven even more customers into our stores and has, for example, helped deliver a record autumn season on women's footwear.

We maintained our exceptional quality standards, as recognised by over 30 awards. We were named Supermarket of the Year at the International Wine Challenge Awards for a record 3rd year running.

M&S Direct had a strong quarter with sales up 49%. 'Shop Your Way', our multi-channel ordering service, has now been rolled out to 434 stores as planned, and continues to be very popular with customers.

International sales were up 6.2%, as a result of improved performance across most of our markets although the trading conditions remain difficult in Ireland and Greece.

Outlook
Trading conditions ahead are likely to become more challenging. Consumers' disposable incomes will come under greater pressure from increased VAT rates and public spending cuts. We are facing increased commodity prices and significantly tougher comparatives in the second half. As a result we remain cautious about the outlook for the remainder of this year and next. However, our unrivalled value, innovation and quality will ensure that we are well positioned to meet the changing needs of our customers through the all important Christmas period and beyond.

Guidance
Existing guidance for the financial year 2010/11 remains unchanged. However, as a result of increased investment in marketing and higher volumes, operating costs before bonus are now expected to be at the top end of the previously guided range of +4 to 5%.

Marks and Spencer Group plc will report its half year results for 26 weeks ending 2 October 2010 on 9 November 2010.

Marks and Spencer Group Plc


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