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M&S in recovery as profits soar M&S in recovery as profits soar
(about 1 hour later)
Marks & Spencer has completed its recovery from a failing brand to a powerhouse of fashion.Marks & Spencer has completed its recovery from a failing brand to a powerhouse of fashion.
Britain's iconic retailer has posted a 28.5% increase in annual pre-tax profit to £965.2m - not far off the record £1bn it saw in 1998 before its decline.Britain's iconic retailer has posted a 28.5% increase in annual pre-tax profit to £965.2m - not far off the record £1bn it saw in 1998 before its decline.
But comments that the retail market was becoming "more challenging" as rate hikes bite prompted fears that future growth of the brand will stall. But comments that the retail market was becoming "more challenging" as interest rate hikes bite prompted fears that future growth of the brand will stall.
Shares in M&S fell 2.51% in morning trade to 720p. Shares in M&S fell 2.78% in morning trade to 718p.
The strong performance was driven by increased demand of M&S food and clothing, which was supported by a popular advertising campaign featuring 1960s model Twiggy, singers Myleene Klaas and Brian Ferry and other well-known faces. The improved performance was driven by increased demand of M&S food and clothing, which was supported by a popular advertising campaign featuring 1960s model Twiggy, singers Myleene Klaas and Bryan Ferry and other well-known faces.
'Innovation and newness''Innovation and newness'
The company wll reward its staff for helping revive the M&S brand with a bonus of £90m, including £26m for customer assistants.The company wll reward its staff for helping revive the M&S brand with a bonus of £90m, including £26m for customer assistants.
"We continue to improve our product ranges, offering customers better quality, value, innovation and newness," said chief executive Stuart Rose.
The former Arcadia boss is widely credited for turning around the company's fortunes when he took over in 2004, saving M&S from a takeover from millionaire entrepreneur and Arcadia owner Philip Green.
See live M&S share priceSee live M&S share price
"We continue to improve our product ranges, offering customers better quality, value, innovation and newness," said chief executive Stuart Rose.
The former Arcadia boss is widely credited for turning around the company's fortunes when he took over in 2004, saving M&S from a takeover from millionaire entrepreneur and Arcadia owner Sir Philip Green.
M&S reported a 6.1% increase in underlying UK sales, with new stores stripped out, and in 240 stores overseas, sales were up 16.8%.M&S reported a 6.1% increase in underlying UK sales, with new stores stripped out, and in 240 stores overseas, sales were up 16.8%.
As a result, the company increased its market share in both food and clothing. As a result, the company increased its UK market share in both food and clothing.
It now has 11.1% of the UK clothing market, an increase of 0.7%, while its food market share rose 0.2% to 4.3%.It now has 11.1% of the UK clothing market, an increase of 0.7%, while its food market share rose 0.2% to 4.3%.
M&S hopes its planned expansion and an extensive refurbishment programme - 70% of stores are expected to be remodelled by Christmas - will boost sales further.M&S hopes its planned expansion and an extensive refurbishment programme - 70% of stores are expected to be remodelled by Christmas - will boost sales further.
It also plans to create 10,000 new jobs created in the UK over the next three years. The company is well positioned with clothing and food to ride a likely retail downturn better than most Richard Ratner, Seymour Pierce
M&S profit peak?
M&S plans to create 10,000 new jobs in the UK over the next three years.
Future growth is expected to be helped by business expansion in overseas markets and online, underscored by the appointment of co-founder of Lastminute.com Martha Lane Fox as a non-executive director effective from 1 June.
The group said sales from its website, which was relaunched in March and now carries the full Per Una range, grew by 60% over the year to make it one of the most visited in the UK,
Mr Rose also gave an update on its five-year plan to make the company carbon neutral.
He said two eco-factories are being developed, one in Sri Lanka to manaufacture lingerie and another in North Wales to make upholstery for furniture.
Some analysts believe the group will weather a deteriorating consumer outlook to deliver more profit growth.
"Although life will get tougher with strong comparatives for the first three quarters, the company is well positioned with clothing and food to ride a likely retail downturn better than most," said Richard Ratner, head of retail at Seymour Pierce.