New M&S chief executive Marc Bolland

New M&S chief executive Marc Bolland

Soaring clothing sales at UK retailer Marks and Spencer during Marc Bolland's first quarter in charge will help him ease into the fashion sector, but challenges are just around the corner.

He will no doubt be encouraged by his new company's 7.4% increase in clothing sales for the first quarter period. M&S' market share for general merchandise was up 50bps to 10.7% for the past 13 weeks.

However, with rises to VAT and supplier costs in China imminent, Bolland knows his honeymoon at M&S is likely to be short-lived.

"Following the recent budget we are cautious about the consumer outlook and consumer spending," he said today (7 July). "As a retail industry we should be cautious because the impact of increasing VAT on the consumer will be strong.

"One thing about VAT though is you get time to prepare for the change."

Bolland began his induction period at M&S around nine weeks ago, taking over as CEO from the enigmatic Sir Stuart Rose. He is currently visiting stores, distribution centres and factories before delivering his strategy in November.

Bolland says that women's wear, lingerie, men's wear and children's wear all contributed to growth in the clothing sector, which he enters for the first time from executive roles at supermarket Morrisons and brewer Heineken.

"There is clothing growth all over the place, and very consistent growth against tough comparisons," Bolland says.

Sales of M&S' Per Una range were particularly buoyant in the first quarter, with 10,000 knitwear items sold and online sales of the brand nearly doubling, Bolland adds.

During the quarter M&S also launched a new range as the official tailor of the England World Cup football team. Despite their dismal early exit from the competition M&S sold 5,000 England replica suits during the quarter.

M&S also announced last month the resignation of group finance and operations director Ian Dyson to join pub group Punch Taverns as group chief executive.

Dyson, who still remains at M&S, says that the company continues to manage margins carefully in the face of potential sourcing cost increases in China.

He says: "For the past few years there has always been [margin] pressure somewhere. We've had the impact of a weakened sterling, and higher prices of cotton, raw materials and factories.

"I think we've demonstrated our ability to manage margins well despite those increases, through improving sourcing - whether that is the destination of sourcing or finding other suppliers."

Click here to read this morning's announcement that M&S increased group sales by 4.4%, with total general merchandise sales rising 7% and total food sales climbing 2.9%.