Marks & Spencer today (10 January) said that it expects its full-year gross margin to be hit after investing in general merchandise promotions over the Christmas period.

The retailer added, though, that its investment in offering "even better value" saw clothing sales rise over the festive period.

"In clothing, our focus was on offering our customers real value at a time when they're  managing their budgets carefully," said chief executive Marc Bolland. Our trading strategy worked well, delivering a record  performance in many categories including menswear and sleepwear."

For the quarter ended 31 December, clothing sales rose 1.1% as total sales grew 2.4%. Like-for-like sales increased 0.5%. Total UK sales were up 1.8%, or up 0.5% on a like-for-like basis. General merchandise recorded a 0.8% decline in the UK, and was down 1.8% on a like-for-like basis.

However, the retailer expects its full-year gross margin to be hit. "Our decision to invest in promotions in general merchandise will result in lower gross margin compared to previous guidance, but this will be offset by additional savings generated by on-going tight management of costs," the company said.

Direct sales increased 22.4% as the retailer extended its next day delivery deadline and launched its Christmas Food to Order service, which contributed to a 12% increase in orders.

International sales rose 8.1% over the quarter, reflecting growth in India and Shanghai.

Commenting on the results, Conlumino analyst Neil Saunders said that while M&S' investment in its food division have proved to be a "winning formula", its general merchandise numbers are "far more disappointing".

"Overall, clothing numbers are slightly positive but this growth has largely been delivered at the expense of margin. Home is down sharply, which not only reflects M&S's decision to exit technology but also underlines the fact that there is a lot more work to be done in making this offer compelling for shoppers," said Saunders.

The retailer's share price was up 2.79% to 317.1p a share at 9:56 GMT today.