Marks & Spencer (M&S) today reported better than expected sales for the first quarter and said consumer spending appears to be stabilising.

The 125-year-old retailer said sales at its UK stores fell by 1.4 per cent in the 13 weeks to June 27, after a fourth quarter drop of 4.2 per cent.

Although today's result is the seventh consecutive quarterly fall in sales, it is also the retailer's best performance since the second quarter of 2007-8, and beats analysts' forecasts for a fall of between 1.8 per cent and 3.5 per cent.

Food sales on the same basis were down 0.5 per cent, while clothing and homewares were down 2.4 per cent.

Food sales are key to the recovery of upmarket M&S, which has seen its share of the UK's food market fall from 4.3 per cent to 3.9 per cent as consumers spend less on their weekly shop. It has introduced a new value range and a £10 meal deal to tempt cost-conscious shoppers back in to stores.

The company's sales benefited by around 0.7 per cent from the timing of Easter.

Sir Stuart Rose, executive chairman of M&S, said today: "Consumer confidence appears to be stabilising. However, we remain cautious about the outlook for the remainder of this and next year and will continue to run the business accordingly."

Sir Stuart is set to retire from the retailer by 2011 after a turbulent tenure at the retailer. A search for his successor is now under way.

Last week, Sir Stuart waived more than £1 million worth of Marks & Spencer share options in the face of a shareholder backlash against his long-term incentive plan.

He had been criticised for accepting the award of shares worth three times his annual salary despite the decline in M&S's profits. In May, the company, which celebrates its 125th anniversary this year, announced a 40 per cent fall in annual profits.

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