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LONDON (ShareCast) - The first quarter trading update from Marks & Spencer has pleased the market, with the food division showing its third consecutive quarter of improved performance.

Singer Capital Markets, which believes the shares are fairly priced, acknowledges that first quarter sales were "considerably better" than in the preceding periods, but notes that the High Street giant's performance was helped by a number of factors, including its 125th anniversary campaign, seasonal weather, the timing of Easter and weak comparatives from 2008.

The Easter timing effect is estimated to be worth 0.7%, thus implying an underlying like for like (LFL) decline in UK sales of 2.1%.

General Merchandise saw LFL sales fall by 2.4% (not adjusting for Easter), with Children's Clothing apparently putting in a strong performance. "We believe that Kidswear in particular continues to see its share of the market increase, driven by product, merchandising and promotional improvements," Singer said.

On the Food side "better new product innovation, improved value, and better availability under John Dixon are said to have played a continuing part" in the recovery of this division.

Singer also believes that the clement Spring weather may have contributed to demand for Marks's fresh food offerings.

"Given above average margins in these areas, we believe the Q1 performance should aid gross margins, and partially offset the adverse effects of pricing and promotion," Singer suggests, adding that it expects investment analysts will move full-year forecasts up a shade following this update.

"Assuming no change to gross margin guidance today, we believe today's sales figures ought to add between £10-15m to full year PBT estimates, an upgrade of c2-3%," the broker concludes.