Marks & Spencer profits up 12.9% after 'good' year
Marks & Spencer says it has defied the retail gloom with a 12.9% jump in annual profits to £714.3m.
The profits before tax and one-off items came on sales up 4.2% to £9.2bn, with margins rising in the key clothing and food divisions.
Marc Bolland, delivering his first annual figures since taking over as chief executive, said it was a "good year" for M&S.
But he is cautious about future trading due to pressures on consumer spending.
Even so, Mr Bolland told the BBC there were signs that customers were trading up and "looking for quality" again. "Price points are rising," he said.
The chain runs 600 stores in the UK and 300 overseas, and recently announced plans to move back into France.
Britain's biggest clothing retailer also said on Tuesday that it would begin testing new store formats from October.
These stores will be tailored more to their locations, selling products selected against five local criteria - affluence, demographics, competition, regionality and ethnicity.
The stores would also have improved layouts and signs and better showcase M&S' sub-brands.
For example, a town known to have a large number of families might see its local M&S store stocking far more clothes for children.
Mr Bolland, the former boss of Morrisons supermarket, described the economic outlook as challenging because of a squeeze on consumer spending and higher commodity prices.
However, he said that the recent sharp rise in cotton prices had less impact on M&S than on rivals, many of which sell cheaper goods in which raw materials make up a larger proportion of the price.
M&S, which sees 21 million customers pass through its doors each week, was hit by the recession when its mid-market positioning left it exposed to consumers moving to rivals.
A fightback included initiatives such as its Dine In For £10 promotion, and an advertising campaign featuring X Factor judge Dannii Minogue, former footballer Jamie Redknapp, and model Twiggy.
The result has been a increase in clothing market share of 50 points to 11.7%, with growth across all areas.
Market share in food rose 10 points to 3.9% after the launch of 1,900 new lines.
M&S also saw international sales increase 6.1%, and sales in the online operation rise 31%.
Analysts at Investec Securities said in a research note that the international arm performed much better than expected, in spite of continued weakness in Greece and the Irish Republic.
M&S shares, which have risen strongly this year, closed down 11.4 pence at 385.6p.