Marks & Spencer reported a smaller-than-expected drop in first-quarter underlying sales.
By James Davey and Mark Potter
The 125-year-old group, which sells clothes, homewares and food from over 600 stores in Britain and about 285 abroad, said it remained cautious although there were positive signs on consumer sentiment.
"Consumer confidence appears to be stabilising. However, we remain cautious about the outlook for the remainder of this and next year and will continue to run the business accordingly," Rose said on Wednesday.
Retailers are battling the deepest recession in decades. Industry sales are falling and a raft of the companies in the sector have posted slumps in annual profit.
M&S said sales at UK stores open over a year fell 1.4 percent in the 13 weeks to June 27, after a fourth-quarter drop of 4.2 percent.
That was the seventh quarterly fall in sales in a row, but also the best performance since the second quarter of its 2007-08 financial year. Analysts had forecast a fall of 1.8-3.5 percent, according to a company poll of ten.
The improvement is unlikely to relieve the pressure on Rose, under fire from investors for combining the roles of chairman and chief executive last year against corporate governance guidelines.
He survived an investor rebellion last July, but faces fresh calls to share power at a July 8 AGM.
Three shareholder advisory groups -- Glass Lewis, Pirc and RiskMetrics -- have urged investors to back a resolution calling on Rose to appoint an independent chairman by July 2010.
"My job along with the board is to concentrate on running the business, getting it through the recession, doing the hard nitty-gritty work in the engine room ... and frankly I'm not concerned about it," (the succession row) Rose told reporters.
He said the board's position on succession has not changed.
"We will have a new chief executive in 2010 and we will have a new chairman by 2011. The only date that's written down is the fact that I am leaving come hell or high water by July 31 2011."
SHARES HIGHER
Shares in M&S were up 13.7 pence, or 4.5 percent, at 320 pence at 8:48 a.m., valuing the business at 5.1 billion pounds ($8.38 billion).
The stock has lagged the DJ Stoxx European retail index by 9 percent over the past year, but has climbed about 50 percent this year on recovery hopes.
"They're (the Q1 numbers) better than expected. But the weather's been good, the comps (comparative figures from last year) softer and they've been cutting prices. So it's difficult to give them too much credit," said Pali International analyst Nick Bubb, who has a "sell" rating on the shares.
M&S, Britain's biggest clothing retailer, has admitted it was slow to respond to the downturn, particularly in its upmarket food business, but has since made changes, such as more promotions.
Like-for-like general merchandise sales, spanning clothing and homewares, were down 2.4 percent, against a forecast drop of 3-5 percent. Food sales on the same basis were down 0.5 percent versus an expected decline of 0.5-4.2 percent.
Finance director Ian Dyson said UK gross margin guidance for the year was unchanged at down 125 to 175 basis points.
(Additional reporting by Simon Falush, Editing by Dan Lalor and Erica Billingham)
LONDON (Reuters)