Marks and Spencer said its adjusted annual profits before tax rose 4.3 per cent to £1 billion, broadly in line with analysts expectations, helped by the company cutting its staff bonus.
Chief executive Stuart Rose said M&S, which is considered a bellwether for the state of British consumer spending, had failed to meet its internal targets and so would not pay a bonus. Instead, it would make a one-off £12.8 million payment to store teams.
"We expect market conditions to remain difficult for the foreseeable future and are managing our business accordingly," Rose said in a statement today.
Trading for the first seven weeks of the financial year 2008/09 had been mixed with April proving "a difficult month". "May to date has shown a marked improvement although we remain cautious about consumer sentiment," Rose added.
Annual UK like-for-like sales fell 0.5 per cent in 2007/08.
In the fourth quarter - when the impact of the credit crunch started to hit consumer spending - like-for-like sales fell 1.7 per cent with general merchandise down 3.1 per cent.
Analysts had expected M&S to post an annual adjusted pre-tax profit of £997 million.
Rose, who is due to become executive chairman as well as CEO next month, said he planned to spend £800-900 million this year expanding the business.
"We believe there is a real opportunity to expand our business in the UK and abroad, to stretch the brand into new products areas and to develop our Direct business," Rose said.
M&S Direct, its Internet retailing business, grew 63 per cent online with market share up 200 basis points to 6.2 per cent.
International profit rose 33 per cent with 20 per cent more space added due to investments in Central and Eastern Europe and India. M&S will open a store in Shanghai in the autumn.
Reuters