M&S food sales surged 8.7% over the year, however its investment in value hit profits in the division.
The retailer said its food volumes had outperformed the market, as like-for-likes rose 5.4%. It claimed this was down to product innovation and its value investment, which helped customer perception for both quality and value was at its highest for six years.
However, this hit margin and its food adjusted operating profit was £248m, below the £277.8m achieved last year, although that figure included £24.6m rates relief.
At a group level, M&S profits before tax and adjusting items hit £482m, down slightly year on year, but when almost £60m of business rates relief were taken out of last year’s figures, were up 4%.
Pre-tax profit was up 23% on a statutory basis whilst group sales jumped 9.9% to £11.98bn.
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M&S chief executive Stuart Machin said: “One year in, our strategy to reshape M&S for growth has driven sustained trading momentum, with both businesses continuing to grow sales and market share.
“Our Food and Clothing & Home businesses invested in value to protect customers from the full force of inflation which, whilst impacting margin, was the right thing to do, as serving our customers well is the only route to delivering for our shareholders.”
The retailer also reported a “good start” to its new financial year with growing sales in both food and clothing and expects “modest growth” in revenue over the year.
M&S wants to achieve 1% growth in food market share and an adjusted operating margin of 4% over the next five years.It achieved a 3.4% margin this year.
Machin said this will be delivered through “protecting the M&S magic” of trusted value and innovation in fresh, easy-to-cook food, while fixing the backbone processes of the supply chain and driving growth in the store estate.
