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LONDON - British retailer Marks & Spencer underlined its resurgence yesterday with nearly £1 billion ($2.7 billion) in annual profit, its highest in almost a decade, and said it would create 10,000 jobs.
Adjusted profit before tax at one of Britain's best-known high-street names rose 28.5 per cent
to £965.2 million, in line with analysts' forecasts and just below an all-time high of £1 billion achieved in 1998.
Chief executive Stuart Rose, who is credited with bringing M&S back from the brink since he took over three years ago, said total sales hit a record £8.6 billion thanks to gains across all its ranges, from Per Una lingerie to chocolate cakes.
"We're back in the premiership when it comes to retailing," Rose told reporters.
However, he cautioned that the retail environment would become "more challenging", with rising inflation and interest rates at six-year highs squeezing household purses.
The outlook knocked 3 per cent off M&S shares, which have more than doubled in value since 2004 and enjoyed a strong run up to the results. The stock closed at £7.03.
Rose, who was parachuted into M&S in 2004 to fight a takeover bid, brushed off the share price fall, saying M&S had made a "satisfactory start" to the financial year starting in April.
He plans to add 10,000 new jobs in the next three years to its more than 70,000-strong workforce as the retailer opens new stores across Britain.
Having stabilised its fortunes at home, Rose said he was also now looking to expand into India and "Old Europe" as well as furthering its recent steps into online and electricals. He said he would also look at opening more restaurants following the launch of a 200-seater in northern England.
Analysts were divided about M&S growth prospects as it faces competition for the under-40s shoppers from Tesco and Wal-Mart Asda and fashion chains New Look and Primark.
"It's a good set of numbers, but we believe that M&S will have to run hard to show strong growth in future years," said Panmure Gordon & Co analyst Philip Dorgan who has a "sell" recommendation on the stock.
Seymour Pierce's Richard Ratner rated M&S "outperform" and said the brand was "well positioned with clothing and food to ride a likely retail downturn better than most".
Rose said M&S is on track to increase space by 15-20 per cent in the next five years with out-of-town supercentres and 100 more Simply Food stores planned for this year.
Its market share in food - where Rose sees room to ramp up growth through restaurants, delis and coffee bars - rose to 4.3 per cent. M&S's clothing market share rose last year to 11.1 per cent. Online retailer M&S Direct saw sales increase 60 per cent to £160 million last year. The final dividend payment rose 30 per cent to 12p per share.
- REUTERS
