Marks & Spencer reveals a surge in annual profits

(PA)

Marks & Spencer revealed a surge in annual profits today after winning market share in the face of "challenging" high street conditions.

The chain, which runs 600 stores in the UK and 300 overseas, posted a 12.9% increase in underlying pre-tax profits of £714 million in the year to April 2.

M&S, which sees around 21 million customers pass through its doors every week, said industry figures showed it boosted its clothing market share in the year by 0.5% to 11.7% and food market share by 0.1% to 3.9%.

Helped by an advertising campaign featuring X-Factor judge Dannii Minogue and former footballer Jamie Redknapp, the retailer has put in a resilient performance over the year despite tough trading conditions which have squeezed many other high street operators.

The results are the first delivered by chief executive Marc Bolland, who took up the role a year ago after leaving supermarket Morrisons.

The Dutchman unveiled a strategic review for the business in November, which involved increasing the rate of overseas expansion, making cost savings in its supply chain and a revamp of its various labels to create "proper brands".

Delivering the results, Mr Bolland said: "We traded well in a challenging environment, growing our market share in both clothing and food.

"We did this by offering customers great quality and value, and more choice through innovation."

The group said it had a good start to the new financial year but warned that rising pressure on customers' spending power and soaring costs of raw materials would present challenges in the months ahead.

M&S said it was able to drive market share growth by offering customers more choice and appealing to a "desire to trade up".

The company said sales of its "better" and "best" ranges such as cashmere knitwear and its Autograph brand were strong.

The group added that a range of "innovative" products were also driving sales, such as its Nearly Naked lingerie range, which is designed to "disappear" under clothing, and its water-resistant Stormwear suits.

In food, the company continues to benefit from its successful "Dine in for £10" promotion - and sold 15 million meals during the year.

M&S Direct - its online outlet - saw a 31% increase in sales, outperforming the online market growth of 20%, with its website now receiving more than 3 million visits per week.

The group said it was using social media to engage with customers, with more than 295,000 Facebook fans and 26,000 Twitter followers.

Mr Bolland also revealed a revamp of its store layouts after customers told the company they found outlets "difficult to shop".

A number of pilot stores will be trialled in October, reflecting a new space template, complete with new signage, packaging and labelling to improve navigation for customers.

M&S added it hopes to have a new online platform ready for 2013/14 after it terminated its contract with Amazon.

There was also cheer for the company's legions of small shareholders, as Mr Bolland unveiled a 13.7% increase in the final dividend to 10.8p.