British clothes-to-food retailer Marks and Spencer (M&S) posted its weakest quarterly sales for almost two years yesterday, as interest rate rises and bad weather put off shoppers, and said trading would remain tough.

However, Chief Executive Stuart Rose said his revival of the British high-street store chain was not ?not running out of puff? and M&S shares surged 3.6 percent in early trading on hopes it was taking market share from rivals such as Next M&S, Britain?s biggest clothing retailer, said sales at UK stores open more than a year rose 2 percent in the 13 weeks to June 30, the first quarter of its financial year.

This included a 2.9 percent rise in general merchandise sales and a 0.7 percent increase in food sales. A poll of eight analysts had forecast a 1.3 percent rise in general merchandise and a 1.9 percent rise in food, while M&S said forecasts for both were pitched around 1 percent.

?First-quarter sales are a resilient outcome in a poor market,? Citigroup analysts said in a research note. ?They should show like-for-like clothing trends well ahead of industry norms,? they added, keeping their full-year underlying pretax profit forecast of 1.085 billion pounds ($ 2.19 billion).

M&S is expected by analysts to report an underlying pretax profit of 1,085.5 million pounds, up from last year?s 965.2 million.

Numis Securities analysts recommended selling shares in rival fashion retailer Next and buying M&S instead.

M&S shares were up 2.8 percent at 650 pence, the second biggest riser on the UK?s benchmark FTSE-100 index ? valuing the business around 11.1 billion pounds ? and outpacing the DJ Stoxx European retail sector index.

<B>Getting tougher</B>

Britain?s retailers are struggling as debt-laden shoppers have been hit by five interest rate rises in less than a year, and bad weather in May and June piled extra pain on clothes shops as summer ranges and swimwear have remained on the peg.

The British Retail Consortium said earlier yesterday that like-for-like sales rose 3.0 percent in June, recovering from a six month low in May, but that shoppers had been lured back into stores by price cuts.

Rose said M&S had kept its nerve and held off from putting up ?sale? signs and that it would benefit from a refurbishment programme which is sprucing up around a third of its stores.

<B>Weather bites back</B>

However, he also said retailers were on ?red alert? over worsening trading conditions and that another interest rate rise ? widely predicted by analysts ? would make life difficult.

?We believe that the short-term trading environment will remain very challenging,? he said.

Rose, brought in three years ago to defend M&S from a takeover attempt by rival department stores owner Philip Green, has presided over a turnaround of the 100-year-old company?s fortunes and seen its share price more than double.

In November, he famously said ?weather was for wimps? when it was given by companies as an excuse for poor trading. But he was prepared to take that back on yesterday.

?I?m very happy to eat my words on that one,? he told BBC Radio. ?No one predicted the wettest June since 1914.?

?We sold a lot of umbrellas,? he later told reporters. Rose was speaking ahead of the annual shareholders? meeting later yesterday. ?I was thinking of turning up in a pair of wellingtons and a mac and an Italian umbrella,? he said.

Asked about designer George Davies, the inspiration behind M&S?s Per Una womenswear, amid newspaper reports saying Davies might end his relationship with M&S, Rose said: ?The truth of the matter is I haven?t a clue?.

?George is George .... He?s a man of 65. At some point I?m sure he?ll start thinking about what he wants to do,? Rose told reporters, adding that he hoped to meet Davies later this week.

Davies said in 2005 he was leaving, only to change his mind three weeks later after what Rose described as a ?lovers? tiff?.

M&S said international sales grew by 14.8 percent in the first quarter of its financial year. The company has more than 450 stores across Britain, as well 150 worldwide, including over 130 franchise businesses, operating in 30 countries.