M&S rings up 35% rise in profits

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The Independent Online

The recovery of Marks & Spencer continued today as the iconic retailer posted a 35% rise in profits.

M&S banked pre-tax profits in line with market expectations of £751.4 million for the 12 months to April 1 compared with £556.1 million the previous year.

The improved performance came after M&S boosted sales in the second half of the year under the leadership of chief executive Stuart Rose.

Mr Rose said: "The group has had a good year.

"M&S is beginning to regain its confidence but we still have much to do to ensure that we sustain growth in the long term."

The revival of M&S has seen rivals such as Next put in the shade as many retailers continue to struggle with tough trading conditions on the high street.

Since Mr Rose took over two years ago, M&S has concentrated on winning back "neglected" female customers in the key 35 to 55 age range.

It brought in former George at Asda product director Kate Bostock as head of womenswear and launched a highly successful advertising campaign featuring 1960s model Twiggy.

The introduction of the Per Una fashion brand designed by George Davies has also improved the image of M&S among younger women.

The changes were reflected in second-half sales which saw a strong performance in both womenswear and menswear after a difficult first half.

Group revenues for the year were up 4.1% to £7.8 billion. In the UK, like-for-like sales were up 1.3% to £7.26 billion.

It sent pre-tax profits excluding exceptional items up 35%, while bottom-line profits were up 48% to £745.7 million.

M&S said it will continue to concentrate on driving sales growth and market share from its stores in the coming year.

Like-for-like sales in the fourth quarter of last year were up 6.8% - its best sales performance for three years - although analysts warned that the company faces tougher comparisons this year.

M&S has also benefited from higher margins and improved stock control and is in the middle of a major store refurbishment programme.

M&S - the UK's biggest retailer - said clothing sales were flat over the course of the year as a strong second half was offset by falling sales in the first six months.

But food sales grew throughout the year, with revenues up 7% overall and 3.6% on a like-for-like basis.

Mr Rose said M&S offered the best food on the high street as it tapped into customers' concerns over fat, salt and sugar.

He said food sales were boosted by a high-profile advertising campaign and the success of the additive-free Cook! range.

Mr Rose said: "We have been able to demonstrate a clear upturn in brand momentum measures as a result of our creative campaigns and customers have voted with their feet.

"Levels of footfall have recovered to the highs in 2002, with customer visits increasing by nearly 350,000 a week to just over 15 million a week.

"We are now starting to convert more of these visits to transactions. This will be a key area for improvement in the year ahead."