New-look M&S cuts a dash

THE revival of Marks & Spencer is gathering pace as the clothing giant cashes in on bumper High Street demand. British retail sales in the run-up to Christmas saw the fastest growth in December since 1987, according to the CBI. For the first time in years, M&S has held its own and may even have snatched market share from rivals.

M&S rose 11 1/4p to 371 1/2p as Deutsche Bank analyst Sundeep Bahanda raised earnings forecasts and issued a new 400p price target. The shares have climbed 84% over the past year on recovery hopes. Bahanda expects profits to rise from £481m to £593m this year and reckons the shares are cheap on 19.4-times next year's earnings.

Even the most bearish of analysts are starting to accept that M&S appears to be turning the corner. Richard Ratner at Seymour Pierce believes M&S, Arcadia and Next are each seeing close to double-digit sales growth, if not higher.

Shoppers appear to have shaken off concerns about economic slowdown and embarked on a spending spree. A lack of overseas travel helped boost High Street sales. Analysts estimate the whole retail sector saw like-for-like sales growth of 5% to 6% over the Christmas period. M&S is likely to have matched this, and Bahanda now expects growth of 4% for the whole of its second half.

According to the CBI, retail sales grew 'substantially more than expected' in the first two weeks of December. The robust growth appears to have continued for the whole month. Sales are expected to increase at a 'far slower' rate in January, but will still remain above average.

Department stores group John Lewis revealed sales rose

17.3% in the week to 29 December. They were up 6.4% for the last 22 weeks of the year. Widescreen TVs, DVD players, toys and books were among the best-sellers.