M&S rings up £632m profit

An impressive fourth quarter of sales growth helped the group notch up the underlying pre-tax profits haul, which marked a turnaround on the 40 per cent plunge the previous year.

In presenting his last set of annual results, M&S chairman Sir Stuart Rose said the "worst effects of the recession" were now over, but warned over consumer jitters ahead of the emergency Budget on June 22.

The rise in profits provides an early boost for new chief executive Marc Bolland, who joined from rival Morrisons earlier this month.

Sir Stuart - who is now non-executive chairman and plans to stand down next March - said M&S had also seen a "satisfactory start" to the new financial year.

However, he added: "Consumers are naturally concerned about any impact of the Budget on June 22. We therefore remain cautious about the outlook for the year ahead."

M&S saw UK sales lift 0.9 per cent over the year after a far-better-than-expected 5.1 per cent rise in same store sales during the final quarter.

The group's improved financial performance has seen the group share out an already-announced 81m bonus pot among employees, including 50,000 store staff.

M&S drove like-for-like food sales higher for the first time since the summer of 2007, up 0.3 per cent, helped by promotions such as the "Dine in for 10" deals.

General merchandise sales rose 1.6 per cent and the group claimed to have stolen market share in the clothing sector.

It said shoppers were becoming more confident in their spending on wardrobes and were forking out on "investment pieces" such as coats and leather boots.

"We responded to this trend by increasing the proportion of our higher priced ranges," said M&S.

The group's full-year performance is still a long way from the 1bn in profits recorded in the year to March 2008, highlighting the impact of the recession on M&S.

But it has led a revival in recent months, with the fourth- quarter sales rise its second quarter of growth in a row following two years of declines.

On a 53-week basis and including Easter, underlying profits rose to 694.6m in the year to April 3.

Sir Stuart said he was working with new chief executive Mr Bolland to ensure a "smooth transition" and confirmed he would help the board find his successor to the chairman's role.

But Mr Bolland has already had an eventful start at the group, with news that finance director Ian Dyson is to join Punch Taverns announced just a day after he joined.