Marks & Spencer report £632m profit
High street retailer Marks & Spencer confirmed a return to annual profits growth today after reporting a 4.6% hike to £632.5 million.
An impressive fourth quarter of sales growth helped the group notch up the underlying pre-tax profits haul, which marked a turnaround on the 40% plunge the previous year.
In presenting his last set of annual results, M&S chairman Sir Stuart Rose said the "worst effects of the recession" were now over, but warned over consumer jitters ahead of the emergency Budget on June 22.
The rise in profits provides an early boost for new chief executive Marc Bolland, who joined from rival Morrisons earlier this month.
Sir Stuart - who is now non-executive chairman and plans to stand down next March - said M&S had also seen a "satisfactory start" to the new financial year.
However, he added: "Consumers are naturally concerned about any impact of the Budget on June 22. We therefore remain cautious about the outlook for the year ahead."
M&S saw UK sales lift 0.9% over the year after a far-better-than-expected 5.1% rise in same store sales during the final quarter.
The group's improved financial performance has seen the group share out an already-announced £81 million bonus pot among employees, including 50,000 store staff.
M&S drove like-for-like food sales higher for the first time since the summer of 2007, up 0.3%, helped by promotions such as the "Dine in for £10" deals.
General merchandise sales rose 1.6% and the group claimed to have stolen market share in the clothing sector.
It said shoppers were becoming more confident in their spending on wardrobes and were forking out on "investment pieces" such as coats and leather boots.
"We responded to this trend by increasing the proportion of our higher priced ranges," said M&S.
The group's full-year performance is still a long way from the £1 billion in profits recorded in the year to March 2008, highlighting the impact of the recession on M&S.
But it has led a revival in recent months, with the fourth- quarter sales rise its second quarter of growth in a row following two years of declines.
On a 53-week basis and including Easter, underlying profits rose to £694.6 million in the year to April 3.
Sir Stuart said he was working with new chief executive Mr Bolland to ensure a "smooth transition" and confirmed he would help the board find his successor to the chairman's role.
But Mr Bolland has already had an eventful start at the group, with news that finance director Ian Dyson is to join Punch Taverns announced just a day after he joined.
Sir Stuart shrugged off double-dip recession fears and said he believed the UK was in line for "steady growth".
But he expected the upcoming Budget to be tough on businesses as the Government seeks to cut Britain's debt levels, adding: "We all have to take our medicine."
The search for his successor is "well under way", according to Sir Stuart.
He hinted he may leave earlier than next March if a replacement is appointed sooner, although Sir Stuart stressed he would stay as long as needed.
Mr Bolland is currently on a three-month handover with Sir Stuart, after which time he will begin a review of the group and report back at interim results in the autumn.
M&S shares slipped 2% as heavy falls in the wider market offset the group's annual results, which came in at the top end of market expectations.
Matthew McEachran, analyst at Singer Capital Markets, said M&S had given hope that its fourth-quarter sales results were not just a "flash in the pan".
However, he said: "Marc Bolland will need to draw on all his management skills to improve sentiment towards the company at a time when consumption trends come under pressure again."
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