City mixed over M&S interims

Forecast-beating interims from Marks & Spencer were applauded by the City but analysts were divided on the scope for share-price target and forecast upgrades.

Nick Bubb of Evolution noted: 'The 20 per cent growth in pre-tax profits to£308 million vindicates Rose's stance about not needing sales growth to turn the business around, helped by a huge 3.6 point increase in the gross margin, reflecting much better supplier terms and stock control in clothing.'

However, Steve Davies of Numis said: 'To drive on from here, the company needs to show that it can generate positive growth in clothing sales, as it cannot rely on margin improvement for ever. That will be difficult in the current environment, with competition still intense and rivals such as Primark and New Look still adding new space.'

Investec analyst Mark Charnock believes there is potential to raise full-year forecasts by between£10 million and£20 million. He said: 'Gross margins in clothing were extremely strong. News that George Davies has been persuaded to stay and that store refurbs will be accelerated is good news.'