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Last Updated: Tuesday, 11 July 2006, 07:56 GMT 08:56 UK
Sales lift continues M&S revival
M&S store
Sales growth has continued
The turnaround at Marks and Spencer (M&S) has continued with the retailer reporting "encouraging" sales growth despite tough trading conditions.

The company added that it would be recruiting an extra 4,000 staff to meet demand and help expand its food chain.

Like-for-like sales - which strip out the impact of new stores - were up 8.2% on last year in the 13 weeks to 1 July.

"We are confident that we can continue to drive the business profitably," said M&S chief executive Stuart Rose.

Overall sales were up by 10.4%, with food sales increasing by 9.2% and general merchandise rising 11.7%.

Mr Rose added that while the firm's performance was encouraging, the growth came against "soft" comparative sales figures from a year ago.

"We can't expect the same figures for the second quarter," said Mr Rose in a conference call.

The retailer said that the inclusion of Easter in the first quarter had increased general merchandise and food sales by about 0.8% .

Mr Rose said he would not yet call the latest figures confirmation of a full recovery, and that he would wait until Christmas to assess whether the recovery plan had succeeded.


M&S is two years into a three-year recovery scheme. In May, the retailer reported a 47% increase in annual profits to 745.7m ($1.41bn) for the year to 1 April.

The next test will be the store refurbishment programme, but at the moment the market's relationship with M&S remains heady
Richard Hunter, Hargreaves Lansdown Stockbrokers

In its trading update, M&S said that it would be creating 4,000 new jobs in its stores and it had already begun recruiting, with new staff expected to start in August.

A key reason for the new staff is the growing number of its Simply Food stores, following its acquisition of 28 outlets from retailer Iceland for 38m announced in January.

"The next test will be the store refurbishment programme, but at the moment the market's relationship with M&S remains heady," said Richard Hunter of Hargreaves Lansdown Stockbrokers.

Mr Rose reiterated that despite the latest figures it was "very tough out there" and that "competition had not let up".

He highlighted that pressure was coming from discount stores, such as Primark, as well as the supermarkets. However, he reiterated that the selling point for M&S was its quality.

In wider terms, higher costs in fuel, rates and rent were all ongoing concerns, Mr Rose said.

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