M&S profits soar to £629m

MARKS & Spencer today delivered a robust message to shareholders, unveiling strong full-year figures and a pledge to build on its recent recovery. Chairman Luc Vandevelde described himself as 'absolutely confident'.

He said: 'The plan moves on as we set about growing the business and regaining our pre-eminent position in the UK market.'

The company intends to pilot a combined credit and loyalty card this autumn to reinvigorate its flagging financial services business. Stand-alone home furnishing stores and more food-only shops will also be introduced and Vandevelde is keen to improve the efficiency of the supply chain. He warned, however, that current consumer spending levels are unlikely to be maintained and said costs will be increased this year.

For the year to 30 March, operating profits from continuing operations rose 30.8% to £629.1m, excluding exceptional charges. Adjusted earnings per share were 45.5% ahead at 16.3p. Including various exceptional costs, basic earnings were 5.4p. There is a full-year dividend of 9.5p, an increase of 5.6%. Group turnover from ongoing businesses was up 3.8% at £7.6bn, and the increase in the second half was 6.9%.

Core UK retail operating profit rose 50.9% to £505m but financial services profits fell by more than 12% to £84m. The group was also forced to write off £376m, following last year's sale of US menswear chain Brooks Brothers. Pre-tax profit, including this write-off, was £335.9m, against £145.5m in 2001.

The company has yet to sell the US supermarkets business Kings but Vandevelde is hopeful a disposal will be completed shortly. Buying margins are expected to improve in the core adult and children's clothing ranges and there will be fewer mark-downs than last year. British retail operating costs are expected to rise by 5% due to the impact of one-off IT costs, the sale and leaseback transaction from last year. The credit card scheme will cost about £35m.

The company is paying £60m in performance bonuses to its 60,000 staff. The board will receive £3m of the money. Vandevelde would not be drawn on when and whether UK managing director Roger Holmes will be promoted to chief executive.