Marks & Spencer (MKS.L) reiterated concerns that trading conditions will remain ‘challenging’ for the rest of the year, citing pressure on disposable incomes.

Despite like for like UK sales rising 1.7 per cent in the three months to 2 July 2011, largely as a result of food sales (+3.3 per cent), Marc Bolland, the retailer’s chief executive warned that customers are continuing to carefully manage their budgets.

He explained, ‘As a result we remain cautious about the outlook. Our focus will be on remaining competitive and offering customers great value and quality.’

The retailer saw group sales rise 3.2 per cent over the 13-week period as a whole and total UK sales (excluding VAT) were up 2.7 per cent, lifted by a 5 per cent rise in food sales on the same basis.

M&S Direct – the retailer’s online and delivery service – witnessed a 13 per cent increase in sales as consumers responded to the company’s multi-channel service.

International sales grew too, up 7.8 per cent. On a like for like basis, however, UK sales of general merchandise were flat, recording zero per cent growth – something which the chief executive took aim at in his speech.

Bolland added, ‘Marks & Spencer continued to grow market share in both clothing and food by offering our customers more choice, greater value for money and leading innovation.

‘Against the uncertain economic backdrop, we are focussed on trading through the short term, while building for the long term growth of the business.’

• In the August print edition of What Investment, subscribers can learn the UK retail shares most in demand with fund managers. Click here to order this issue.