M&S holiday sales rise

January 16, 2002 Posted: 0834 GMT

LONDON (CNN) -- Marks and Spencer said on Wednesday holiday sales rose 8.3 percent as the UK's biggest clothing retailer underwent a major overhaul.

Clothing, footwear and gift sales rose 10.9 percent in the seven weeks to January 12, while homeware sales gained 10.2 percent. Sales at stores open at least 12 months rose 10.4 percent.

Once the icon of UK clothing shopping M&S lost its way as women deserted the company's sales floors and competitors squeezed it on quality, price and prestige labelling.

Chief Executive Luc Vandevelde announced in March plans to axe 4,390 jobs and return billions of pounds to shareholders. It closed or sold its international operations, including U.S. men's clothing retailer Brooks Brothers, and introduced new clothing like "per una" for women.                    

"Marks & Spencer has got its act together," Philip Shaw, analyst at Investec, told CNN. "There has been a UK retail boom in December but January has gone off to a slow start."

Vandevelde said he was encouraged by the strong results, helped by the new "per una" range of younger fashion designed by ASDA's former designer George Davies, the founder of Next. But he cautioned the strong UK retail environment was unlikely to last.

"I can't possibly imagine we are going to continue trading at this level," Vandevelde said, predicting the company's current 10 percent rate of growth in sales of clothing and hardware would ease off by mid 2002 or the autumn.

"I think 5 percent is a lot more rational than 8 percent to 10 percent," he added.

The company hopes to announce the sale of its other U.S. operation, Kings Super Markets stores, and plans to return £2 billion to shareholders next week.

M&S's stock rose 2.2 percent to 367.95 pence in early London trading on Monday. Its stock has risen almost 90 percent over the last 12 months as the company replaced most of its board and instituted its overhaul.