M&S returns to non-food sales growth after four-year wait

* Shares (Berlin: DI6.BE - news) jump 6 pct to 7-year high

* Q4 non-food sales up 0.7 pct

* Analysts had forecast drop of 1.2 percent

* Gross margin guidance maintained

* Food sales up 0.7 pct (Adds CEO, analyst comment, shares)

By James Davey

LONDON, April 2 (Reuters) - British retailer Marks & Spencer (Other OTC: MAKSF - news) posted its best quarterly non-food sales performance in four years, putting behind it the online distribution problems that ruined its Christmas and buying its chief executive more time to secure a recovery.

Shares in Britain's biggest clothing retailer rose as much as 6.3 percent to a seven-year high after it said sales of general merchandise, spanning clothing, footwear and homewares, rose 0.7 percent in the past quarter at stores open more than a year.

CEO Marc Bolland highlighted "high single-digit" like-for-like sales growth at both its relatively upmarket Autograph and Limited clothing brands, and noted positive press reviews of a 199 pounds ($295) suede skirt that will hit stores this month and is attracting high levels of pre-registration.

The outcome was the first time in 15 quarters M&S has not posted a fall in non-food like-for-like sales and was also better than analysts' average forecast of down 1.2 percent.

It followed a third-quarter slump of 5.8 percent, reflecting unseasonal weather in October and November and disruption at its e-commerce distribution centre at Castle Donington in central England.

Bolland, CEO since 2010, has spent billions of pounds addressing decades of under-investment at M&S, overseeing a redesign of products, stores, logistics and its website.

But a new clothing team he set up in 2012 has so far failed to deliver a sustained increase in sales. When products have proven a hit, it has often struggled to replenish supplies fast enough before shopper interest subsided.

However, a food business outperforming the wider grocery market and improving profit margins both in non-food and food have kept investors onside, with M&S shares rising 44 percent over the last six months.

MORE TO DO

"It's a step-by-step journey and we're taking steps in the right direction," Bolland told reporters. Asked how long he planned to stay as boss, he said: "I'm really enjoying the role and there's more to do."

M&S shares were up 30.5 pence at 560.5p by 0928 GMT.

"We continue to see a material gross margin opportunity in general merchandise, which we expect to drive forecast upgrades over the next few years," said Investec (LSE: INVP.L - news) analyst Kate Calvert.

Bolland's strategy is to focus on margin. M&S maintained guidance for a rise in general merchandise gross margin in 2014-15 of between 150 and 200 basis points, having promoted less and focused more on full-price sales.

M&S.com sales returned to growth in the quarter with sales up 13.8 percent, while Castle Donington was said to have performed well.

Like-for-like sales in M&S's food business rose 0.7 percent in the 13 weeks to March 28, its fiscal fourth quarter, a 22nd straight quarterly rise. Full-year gross margin guidance for food was maintained at up 10 to 30 basis points.

However, M&S said macro-economic issues in Russia, Ukraine and Turkey, coupled with a weakening in the euro, had dented second-half profit in its international division, where fourth-quarter sales fell 3.8 percent.

M&S, expected to post a first profit rise in four years when it reports yearly results on May 20, said it still expected analysts' consensus for 2014-15 profit to edge up from 641 million pounds prior to the update. ($1 = 0.6734 pounds) (Editing by Paul Sandle and David Holmes)