Marks & Spencer's Shares Surge After A Drop In Sales Because Even 'Bad' Is Better Than 'Worse'

Joanna Lumley and Marc Bolland Stuart Wilson/Getty ImagesM&S CEO Marc Bolland with actress Joanna Lumley, who has promoted M&S clothing lines

Results just out from Marks & Spencer, one of Britain’s biggest food and clothing retailers, should have been bad news. Sales in the first half of the year dropped 2.3%, with an even worse 6.3% decline online.

That’s 13 straight quarters of declines. The retailer tried to blame a warm September for poor sales, since the first cold snap usually drives winter clothing to the tills.

So why are shares up 8.2% this morning?

Everything’s currently so poor for UK retailers, that analysts were expecting worse, and this is actually a pleasant surprise. Mike van Dulken at Accendo Markets explains in a note:

The jump comes on the back of first half results to end September which delivered a surprise rise in underlying profits (the first such jump in 4 years) on improved profit margins and better performance from Food which has offset the still ugly 13 consecutive quarterly falls in underlying sales, echoing peers with a negative impact on the recent Autumn/Winter clothing sales from unseasonably warm UK weather.

It’s gotten to the point that expectations are so low, even a minor disappointment is enough to send stocks upward.

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