Marks and Spencer shares jump on margin forecast, dividend payout Shares in Marks and Spencer jumped almost 8 per cent in early London trading as the high street bellwether raised its dividend and upgraded its forecast for profitability. The shares rose 33p to 437.8p on Wednesday despite M&S suffering its 13th consecutive quarter of declining clothing sales as unseasonable temperatures and teething troubles at its new website hit trade. Investors were encouraged by M&S raising its interim dividend 3.2 per cent, to 6.4p a share, to reflect better free cash flow and confidence in the profit outlook. The retailer also upgraded its forecast of the increase in its full-year gross margin - the difference between the price at which retailers buy and sell goods - from 1 percentage point to between 1.5 and 2 percentage points. Some analysts suggested that the performance offered the first glimmers of hope for M&S and its chief executive Marc Bolland, after billions of pounds of investment and torrid trading conditions. Tony Shiret, analyst at Espirito Santo, said: "Clearly trading conditions remain difficult in clothing . . . but these results are probably the first for a long time which will not result in forecast downgrades." Asked whether M&S had finally turned the corner, Mr Bolland said: "I will not use the same words, but I would say that these signs are all encouraging, and they were planned for, because we clearly had a three-year investment period." The gross margin rose 1.5 percentage points in the first half of M&S's financial year, compared with the retailer's previous guidance of a 1 percentage point escalation. Mr Bolland, pictured, said 1.2 percentage points of the improvement came from better buying and sourcing of products. This included consolidating the buying of M&S's fabrics, and shifting the countries of manufacture within the retailer's existing network of suppliers for some products. He said gains had come "somewhat earlier" and to a greater extent than expected. However, sales of general merchandise, which includes clothing and homewares, from UK stores open at least a year fell 4 per cent in the three months to September 27, slightly worse than the consensus of analysts" forecasts of a 3.7 per cent decline. M&S said 2.5 percentage points of the decline was due to the unusually warm conditions in September. It said that within clothing, womenswear continued to improve, but "recent market conditions remain challenging, with unseasonal weather resulting in high levels of promotional activity across the market." Mr Bolland said October had been "nearly equally" as difficult as September, although it had been "slightly better." He said that while M&S had "slightly higher stock" as a result of the recent conditions, it did not have "a massive overhang of stock." Like-for-like sales of food rose 0.2 per cent, in line with analysts" expectations. Online sales fell 4.6 per cent in the second quarter after glitches at M&S's website, relaunched in February at a cost of £150m - an improvement on the first quarter's 8.1 per cent decline. Mr Bolland said he expected online sales to move into positive territory over the next few weeks. The run-rate at the end of September was near flat, and the retailer was now moving towards online sales growth, he added. Group sales in the six months to September 27 rose 1 per cent to £4.9bn, while underlying pre-tax profit rose 2.3 per cent to £268m. Statutory pre-tax profit was flat at £279.4m. M&S's comments follow those of rivals Next and Supergroup, which both cautioned that profits would be hit by the warm spell, with last Friday the hottest Halloween on record. Richard Hyman, the independent analyst who runs the Richard Talks Retail website, estimates that the recent warm weather has cost clothing retailers about £700m in sales. He does not expect this to be recovered over the remainder of the season. However, Primark said on Tuesday that while it had been affected by the weather, its sales and profits had still grown more than 10 per cent in the four weeks beginning September 14. Mr Bolland's predecessor, Sir Stuart Rose, once declared that "weather is for wimps."