M&S turnaround efforts starting to take effect, with October sales up 2.7%

London

MARKS & Spencer Group Plc's efforts to turn around its troubled clothing business showed signs of life in the autumn, boosting the UK retailer after a weak first half of the year.

The division's full-price and planned promotional sales rose 2.7 per cent in October, the company said on Wednesday.

The shares rose as much as 7.9 per cent in early London trading, though they're still down by about one-third over the past 12 months.

The update follows a series of setbacks in M&S's apparel business, where sales fell more than analysts expected in the first half even as the food unit beat estimates.

The company has been trying for years to turn around the clothing arm, which has wrestled with problems ranging from an inadequate supply chain to a bloated real-estate portfolio that it has pared back by closing dozens of stores.

M&S's report followed news late Tuesday that baby-products retailer Mothercare Plc is shutting its UK operations, threatening 2,500 jobs and adding to the toll on the country's shopping streets.

British retailers are in crisis as consumers defect to Amazon.com Inc., and political turmoil around Brexit undermines confidence.

M&S chief executive officer Steve Rowe said its turnaround is starting to take effect.

The October results provide a glimmer of hope, Morgan Stanley analysts including Geoff Ruddell said in a note.

The company's update is encouraging because it suggests that recent supply-chain issues are under control and that customers liked the new ranges for autumn and winter, the analysts wrote.

M&S's year has been marked by high-profile exits, with the head of clothing and chief financial officer leaving, while the shares dropped out of the benchmark FTSE 100 index.

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