For the first time in three years, Marks & Spencer, the UK's largest clothing retailer, has posted a drop in profits and cut growth targets for the coming year, citing an "increasingly challenging consumer backdrop".
Pre-tax profit decreased 15.7 per cent from £780.6m last year to £658m for the 52-week period ended 31 March 2012.
Basic earnings per share were 32.5p.
Group revenue increased by 2 per cent to £9.93bn (2011: £9.74bn), while international and multi-channel sales increased by 5.8 per cent and 18 per cent, respectively.
Like-for-like sales in the UK increased by 0.3 per cent, while food sales improved by 2.1 per cent. General merchandise sales, however, declined by 1.8 per cent. The company reduced its net debt from £1.90bn in 2011 to £1.86bn.
During the year, M&S made good progress with supply chain and IT programme implementation and managed retail staffing costs.
Marc Bolland, chief executive of M&S, said:
Marks & Spencer performed well in a challenging economic environment, growing group sales by 2 per cent and holding market share. We also made good progress with our strategic plans.
We managed the business prudently with tight control of costs and capital investment, delivering earnings in line with last year and substantial efficiency savings in our capital investment plans.
While the economic environment has deteriorated since we first set out our strategic plans, we have made significant progress. Our UK pilot stores are delivering good results . . . We are well on track to become a truly international multi-channel retailer. By the end of this year, we will be transacting from ten websites worldwide and opening around 100 international stores per year.
The company announced full year dividend of 17.0p per share (2011: 17.0p).
Robert Swannell, chairman of M&S, said:
We have a clear strategy for the business. We remain focused on delivering this strategy effectively and efficiently. In line with the dividend policy set out last year, the board is recommending a final dividend of 10.8p per share, resulting in an unchanged full-year dividend of 17p per share.
For the financial year 2012-2013, the company expects gross margin to be between 0 and 25 basis points higher than last year. Operating costs are expected to increase 3 to 5 per cent as a result of increased space growth, depreciation, inflation and growth initiatives, offset by underlying savings.