M&S sees the consumer back on high street

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The Independent Online
Marks & Spencer gave the rest of the high street cause to cheer yesterday when it reported better-than-expected results for last year and issued an upbeat statement on consumer spending.

Announcing a 7 per cent increase in pre-tax profits to pounds 994m, the chairman, Sir Richard Greenbury, said: "There are signs that the consumer is coming out of the trenches. It's not a boom but it is looking a lot better."

Both the food and clothing divisions performed strongly. Home furnishings sales increased by 16 per cent between January and March, suggesting a return to buoyancy in the housing market.

But the shares rose by 7 per cent to 462p mainly on the back of a far better than expected performance from Brooks Brothers, the US retailer which has proven such a problem in recent years. Now under new management and with a better range of both formal and casual clothing, the chain almost doubled its profits to pounds 10.7m. "We've got a long, long way to go. But this is an encouraging start and it gives us confidence," Sir Richard said.

In Canada, M&S took a pounds 25m goodwill write-off on the sale of its D'Allairds chain. The ongoing Canadian business lost pounds 3.2m, hindered by high rents, an over-supplied market and a sluggish economy.

M&S plans to open two new stores in the UK in the coming year, one in London's Finsbury Pavement in September, the other in Hastings next March. A further five will open in Europe and 12 in the Far East. In addition a further 30 outlets will be extended to add around 300,000 square feet of new trading space.

M&S created 1,000 jobs last year and will create another 1,500 this year as part of a plan to improve customer service in certain areas, such as men's suits and home furnishings.

Clothing sales rose 3.9 per cent over the year. The warm early autumn weather caused a drop in sales during August and October, causing pounds 90m of winter stock to be marked down in January. Women's blouses proved a problem area but sales of dresses, trousers and suits were strong.

Food sales improved by 5.4 per cent. The foods director, Guy McCracken, said M&S had maintained its 4.3 per cent share of the pounds 58bn grocery market despite tough competition from supermarkets.

Financial services contributed pounds 61m of profits compared to the previous year's pounds 49m. Sales of pensions and life assurance policies have been "below expectations" but are picking up. Around five million M&S cards are now in issue, making up a quarter of M&S group sales. Group sales rose by 6.2 per cent to pounds 12bn. The dividend was raised 10.7 per cent to 11.4p per share.

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