The faster rate of development, which will lift capital spending to pounds 350m a year over the next two to three years, was revealed yesterday as M&S produced a stronger-than- expected 21 per cent increase to pounds 307.8m in pre-tax profits for the six months to 25 September.
Sir Richard Greenbury, the chairman, warned that tax increases already announced together with a tough Budget later this month could inhibit the full recovery of consumer confidence.
But M&S shares rose 7p to 403p, helped by the results and a 13.6 per cent increase in the interim dividend to 2.5p.
Sir Richard said that the 'outstanding value' campaign launched by the company more than a year ago had been successful and had produced consistent sales growth and gains in market share in clothing and food. Sales of general merchandise grew by 7.3 per cent to pounds 1.3bn and food sales rose by 6.4 per cent to pounds 1.1bn.
Keith Oates, joint managing director, said prices had shown no overall change on average in M&S stores over the year while trading space had increased by a little more than 2 per cent.
This implied that sales volumes had risen by between 4 per cent and 5 per cent, which was a larger increase than shown by clothing and food sales generally.
Mr Oates said that M&S's food operations had not been affected by the growth of discount retailers.
'Obviously there are very few discounters in the UK as yet. We feel that our 5 per cent share of food retailing is in a different sector of the market from the discounters and we don't believe that at this stage they will have an impact on us'.
A 23 per cent rise in UK and Ireland profits to pounds 295.9m included an increase in profits from M&S's financial services - personal loans and unit trusts - from pounds 12.6m to pounds 15.5m. Overseas profits improved by 42 per cent to pounds 18.6m despite increased losses of pounds 1.3m in M&S's Canadian operations, which were cut back last year.
The Far East and US remain firm but Continental Europe, where profits rose from pounds 7m to pounds 9.9m, remains difficult, along with Canada. M&S is opening four new stores in the UK in the year to March, ranging from 40,000 to 71,000 square feet.
Brooklands in Surrey and Gyle in Edinburgh are now trading while Torbay, Devon, and Newport, Isle of Wight, open this month and in March respectively.
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