Marks & Spencer has managed to lift its average general merchandise basket value 2% in the first quarter, but new boss Marc Bolland is cautious about prospects.

The increase was accompanied by a 6% rise in general merchandise like-for-likes and a total clothing sales increase of 7%, but M&S expects tougher trading conditions following the emergency Budget, which included a VAT rise.

The increase in average basket value resulted from the retailer’s assortment mix and customers’ willingness to treat themselves with better and best product - the retailer did not increase opening price points.

But Bolland, who joined from Morrisons in May, said: “We are cautious about the outlook for consumer confidence. We have to see how it will pan out.”

He was pleased, however, that there is “time to prepare” for the VAT change.

M&S reported group sales growth of 4.4% in the quarter, when Direct sales advanced 49%. UK like-for-likes rose 3.6% and food like-for-likes by 1.5%.

Bolland said the food performance was the result of “excellent work on innovation and value”.

The retailer stuck to its original guidance that gross margin would be broadly flat over the year.

Investec analyst Katharine Wynne said: “We expect margin investment to resume in order to protect the top line, which remains exposed to supermarket competition in both core divisions.”

➤ M&S sold 5,000 of its official England team World Cup suits. Bolland said the retailer would happily continue its association with the squad, despite the team’s poor performance in South Africa.