THE new boss at Marks & Spencer said the retailer was braced for tougher times – despite delivering better-than-expected sales in his first update.

The former head of Morrisons, who joined M&S on May 1, reported same-store sales up by 3.6% in its first quarter.

The result beat market forecasts for a rise of 2.3% and represented the chain’s third successive quarter of sales growth as its recovery gains momentum.

Strong demand for barbecue foods and knitwear helped it lift like-for-like sales by 1.5% for food and 6% for general merchandise in the 13 weeks to July 3.

However, M&S shares fell by more than 3% as the group said Government austerity measures and an impending rise in VAT to 20% posed a threat to consumer spending.

The group still believes the wider economy will avoid a double-dip recession – although it is braced for pain on the high street from spending cuts and tax hikes.

Despite the disappointing market reaction to the figures, analyst Philip Dorgan at Ambrian said it was “another pleasing sales update, demonstrating an improving two year trend”.

M&S said it had gained market share in clothes thanks to improved ranges, while it added 570 new products in its food aisles.

Its internet offering M&S Direct lifted sales by 49%, although the international division posted a more muted 0.9% rise.

Retail experts are now waiting to hear details of Mr Bolland’s plans for the group at the interim results in November.

He is on an induction period as part of a handover with outgoing boss Sir Stuart Rose – visiting stores, suppliers and international operations.

He is also preparing for his first annual meeting with M&S next week – when huge pay packages for Mr Bolland and Sir Stuart threaten to spark another investor rebellion.

Pensions advisory group PIRC is urging investors to vote against the firm’s remuneration report on July 14 because of its “highly excessive” rewards for top brass.