Chief executive Marc Bolland described the retailers performance as “a good fourth quarter in a challenging environment.”

Chief executive Marc Bolland described the retailer's performance as “a good fourth quarter in a challenging environment.”

Well, that could have been a lot worse, couldn’t it? Looking in isolation at the fourth quarter figures revealed by Marks & Spencer this-morning (6 April), they appear less than inspiring, especially in non-food terms – but relative to analyst expectations and the overall market, they’re positively rosy.

The 2.3% rise in reported group sales is inflated by a 12.6% hike in international revenues, leaving UK sales up only 1% and like-for-likes inching up by just 0.1%.

Drill down further and food looks the strongest performer, a 4.9% sales rise offsetting a 3.4% decline in general merchandise, and a 3.4% like-for-likes rise outstripping GM’s lacklustre 3.9% fall.

Companies are often fond of using underlying trends to paper over the cracks in their true performance, but for once with these figures, M&S has good reason to set out the broader context.

First of all, seasonal variation. Last year’s figures included the first five days of the company’s Christmas sale due to a reporting quirk that made 2009/10 a 53-week year (that happens every six years, apparently).

Work that into the stats and suddenly group sales are up 4.2%, and UK sales rise 3.2%; more significantly, while food is unaffected, GM reported sales are now up 1.2% and like-for-likes nudge up 0.7%.

Then there’s the market. Up against its own tough comparatives from last year, M&S has increased its market share across the board, but in terms of general merchandise, has bumped its share by 30 basis points to 11.6% (three times the gain made in food terms).

Men’s wear and lingerie were identified as the strongest performers, although a flat performance for women’s wear was more of a cause for concern. However, M&S pointed to a “good start” to its women’s wear spring campaign.

So much for the good news. What remains is that all-too-familiar pincer movement that is currently gripping retailers in the UK in particular: cost inflation on the supply side, and dwindling consumer confidence thanks to austerity measures on the demand side.

Chief executive Marc Bolland played this with a realistic, but not entirely gloomy, straight bat. “After January there was a drop in consumer confidence that we all saw,” he told reporters.

“But in February and March, consumer confidence has been low, but stable. We have not seen, as some people suggest, hitting a wall or coming off a cliff in March – no negative impact after the Budget.”

In terms of cost inflation, the average sales price for general merchandise has gone up by 6% – a worrying sign that will eventually manifest itself in consumer resistance and falling sales? Not a bit of it, says Bolland.

He puts the rise down to a combination of the VAT increase of early January (from 17.5% to 20%) and a change to the mix (accounting for 3.5% of the 6%), with customers trading up from the company’s “good” products to “better” and “best”.

An encouraging sign, built around “events” such as Valentine’s Day and Mother’s Day, when consumers who have been holding back open up their wallets and purses and splash out on higher-ticket items.

That’s fine as long as there are “events” to pin such sales on (Easter, for instance), but it does pose questions about the broader underlying consumer trends in the months ahead.

And that’s why M&S is remaining cautious about the rest of the year, focusing on minimising cost increases through savvy sourcing, and continuing the company’s international expansion in India, Shanghai and via its “clicks and bricks” strategy in France.

Because, while the company has turned in a creditable fourth quarter performance in its UK heartland, it knows the battle will only get tougher as the year goes on and those austerity measures continue to bite.

For now, however, it can take credit for a job well done in a highly difficult market.