Marks & Spencer reveals better-than-expected surge in annual profits

It notched up an 11.3 per cent hike in like-for-like food sales over the year, with growth of 5.2 per cent across its clothing and home arm.

The group said it was upping its cost-cutting target by another £100m to £500m by 2027-28 as it looks to offset rising staff wages.

“With continuing cost headwinds, notably from investment in colleague pay, the structural cost programme is critical to our profit progression,” the firm said.

It said it was in the “strongest financial health since 1997” and was confident of making “further progress” over the financial year ahead.

Stuart Machin, chief executive of M&S, said: “Two years into our plan to ‘reshape for growth’ we can see the beginnings of a new M&S.

“Food and Clothing & Home grew volume and value share ahead of the market and sales increased across stores and online.

“Both businesses have now delivered 12 consecutive quarters of sales growth and this trading momentum gives us wind in our sails, and confidence that our plan is working.”

But he added that “there remains much work to do”.

“We need to move faster and be ruthlessly challenging on the areas where progress has been slower, building a more effective digital and technology infrastructure, accelerating the move to a truly personalised customer experience, and resetting priorities in International,” he said.

The group cautioned that profitability at its Ocado Retail joint venture was “well below the original business plan and expectations”, but that it was working closely with partner Ocado to “reset the business” and drive customer and sales growth.

Charlie Huggins, Manager of the Quality Shares Portfolio at Wealth Club, commented: "M&S has had an excellent year and there is now enough evidence to suggest this isn't a flash in the pan.

"Sales have grown strongly, with 12 consecutive quarters of growth for Food and Clothing and Home. Profit margins have also risen nicely as a result of greater efficiency, and cash flow has been strong, enabling M&S to return to the dividend register.

“The most impressive thing about the M&S turnaround story so far has been the market share gains, in both Clothing and Food. They have been able to achieve this while reducing discounts, which is a good sign. In other words, they aren’t just slashing prices in the hope of getting quick sales growth. They have been focused on reinvigorating branding and designs, which ought to be more sustainable.”