Marks and Spencer profits top £1bn

20 May 2008 04:28pm

Marks & Spencer's annual profits have topped £1 billion for the first time in a decade.

The profits of just over £1 billion for the year to March 29 were 4.3% ahead of last year, but came alongside a 1.7% fall in like-for-like sales during the final three months of the year - the second successive quarter of sales declines after a disappointing Christmas.

Chief executive Sir Stuart Rose said he expected market conditions "to remain difficult for the foreseeable future".

And in the City experts predicted M&S profits this year could fall below £900 million in the current bleak retail climate.

M&S paid out a record £91 million in bonuses to its 75,000 staff last year, but has slashed the payout this time after it failed to hit internal targets. The group will, however, pay out £12.8 million to its 62,000 customer assistants, while a spokesman added that high-performing head office teams could share in a £4 million bonus pot.

The results represent M&S's best performance since 1997/98 and exceeded market forecasts of £989 million. The company now has more than 21 million customers shopping in its store every week, 400,000 ahead of the previous year.

Sir Stuart - who has led the turnaround of the business since 2004 - added that trading since the end of March had been "mixed", with sales suffering in April's downpours before recovering with better weather earlier this month.

The M&S chief also remains cautious over consumer sentiment, although the group still intends to spend up to £900 million on its stores this year.

There were fears in the City over M&S's clothes sales after poor figures from rival Next, but the group cut prices to protect market share as well as extended the range of its Autograph collection.

Like-for-like sales among general merchandise - which includes clothing - fell 3.1% in the first three months of the year, slightly better than most forecasts.

© The Press Association