Marks and Spencer

M&S’ sales were boosted by another strong performance in food

Marks & Spencer has reported better than expected profits – boosted by another strong performance in food.

The high-street retail giant reported a 3.9% fall in full-year underlying pre-tax profit to £623m in the year to 29 March.

Although it was the third consecutive drop in annual profits, the figures were ahead of analyst forecasts of £615m.

Like-for-like food sales rose 1.7% helping to offset a decline of 1.4% in the struggling general merchandise business – which comprises clothing and homeware.

While gross margins fell in general merchandise, gross margins in food climbed strongly – by 80 basis points to 32.5% – thanks to “supply chain efficiencies and effective management of promotional activity”.

M&S said it was not being lured into the supermarket price war.

“Rather than joining the race to the bottom on price, we are focused on developing top-quality ranges that are competitively priced, whilst ensuring farmers get a fair deal too,” it said.

The retailer said 20% of its food products would be new this year. It has also increased the number of stores stocking the full range to about 110.

M&S is at the end of a three-year investment programme and has now pledged to cut capital expenditure from £550m to £500m. It said it was moving from “transformation to delivery”.

“Three years ago we recognised the scale of investment required to transform our business, investing to strengthen our foundations and improve our customer offer,” said M&S CEO Marc Bolland. “We are making solid progress on this journey and are now focused on delivery.”