The usually urbane Sir Stuart Rose must be feeling riled. Marks & Spencer report a 2.2 per cent fall in like-for-like sales after Christmas and investors wipe £1.6 billion from the retailer’s market value.

Next today posts an 8.9 per cent plunge in like-for-like sales for the first quarter of the year and the share price rallies. Up nearly 6 per cent, Next is the second-highest climber in the FTSE 100 this morning.

Perception is key and investors feared far worse from Next. Scare stories on the high street abound and Next today has managed to calm nerves. Simon Wolfson, the chief executive, pointed out in March that the first quarter numbers would look bad given not only the consumer downturn but also comparisons with last year, when the high street was bathed in sunshine for much of April.

Less stock will be going into clearance sales given tighter cost controls. Margins are steady and profit guidance for the full-year remains in line with earlier estimates. Even more encouraging is that trading has been positive since the beginning of May as the weather improves.

Despite the widespread relief investors should remain cautious, given not only continuing concerns about sales densities and the appeal of the Next brand but also the sheer uncertainty over how the consumer feels.

Full-year pre-tax profits of £430 million, the bottom end of the range given by Next today, mean the shares are trading on a multiple of 8.5 times forecast earnings. While cheap, more evidence of a turnaround is needed for investors to buy the stock.

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