Profits were nevertheless better than expected at the retail bellwether, which hailed the performance as evidence of progress from its turnaround plan, which has seen it shut dozens of its larger stores amid an overhaul of its store portfolio.
Total revenues grew by about a tenth to £11.9 billion, compared with the previous year, with clothing and home sales specifically lifting by 11.5 per cent to £3.72bn, and income in its food operation growing by 8.7 per cent to £7.22bn. Profit before tax and adjusting items came in at £482 million, down from £522.9m 12 months previously, with M&S saying the dip was due in part to the loss of pandemic-era business rates relief from the UK government.
The retailer also stated that it expects to face more than £50m of energy cost rises and at least £100m in staff pay increases over the coming year, but stressed plans to offset this with its cost-cutting plan designed to secure a further £150m a year.
M&S told shareholders it has witnessed a "good start" to the new financial year, despite an "uncertain" outlook for consumer spending. Chief executive Stuart Machin said the company expects recent price increases to “soften", but stressed that there is still inflationary pressure in its supply chain due to higher labour costs and some commodity price rises. "As soon as the cost of products comes down we will pass that on to the customer," he added.
Zoe Gillespie, investment manager at RBC Brewin Dolphin, commented: “These are not just great results – they are M&S results. [The company] has been going through a seemingly never-ending process of restructuring itself for the future, but that long journey appears to be yielding results with a set of numbers that have beaten forecasts.
"The planned reinstatement of the dividend is good news for shareholders, and suggests management are relatively confident about the medium-term outlook… M&S has taken some important self-help measures in recent years and, with a strengthened balance sheet and a new set of priorities, it is in a stronger position than it has been for some time.”