Marks & Spencer PLC cautioned profits are likely to be flat this year due to the impact of the war in Ukraine, increasing cost pressures and growing consumer uncertainty.
The grocery and clothing retailer reported a heathy 6.9% rise in sales in the year to 2 April 2022, with underlying profits up 30% at £523mln, which included £59.8m of UK business rates relief and a net rates charge of £139.7mln.
Steve Rowe, chief executive, added however that in the current year the retailer will not receive business rates relief and International will not have a profit contribution from Russia, while more money has been earmarked for its Ocado joint venture, where a separate profit warning was issued today.
"As we invest in capacity growth at Ocado Retail, we anticipate a minimal contribution of share of net income to group results," he said, and as a consequence, M&S does not “currently expect to progress from this lower profit base in 2022/23”.
Statutory profits were £392mln compared to a loss of £201mln a year ago.
Rowe steps down today after six years at the helm and said under his tenure M&S had fundamentally changed and moved beyond “proving its relevance” to a point where it has “an opportunity for substantial future growth”.
He highlighted the resurgence of clothing, its tie-up with Ocado, the growth of its online offering and strong food sales as evidence of its newfound focus.
All these helped the latest numbers, he said.
Clothing sales in the year just ended rose by 3.8%, driven by online growth, while more full-price sales boosted operating profits.
M&S food sales rose by 10.1%, the best in the sector, with operating profits also up strongly. The Ocado Retail JV saw a decline of 4% in its sales, though Rowe said it would continue to invest in new capacity for the JV, underlining its confidence in its long-term future.
Trading in the first six weeks of the current financial year has been ahead of the comparable periods in 2021/22, M&S added, including the period from 12 April 2021 when non-essential retail reopened.
There had been a particularly strong performance in Clothing & Home while growth in the total Food business was continuing to outperform the overall market.
The dividend for the year is 3.9p.