M&S said "improved" buying and better "management" of promotions helped margins from food

M&S said "improved" buying and better "management" of promotions helped margins from food

Marks and Spencer today (21 May) reported a fall in annual group profits but sales and margins from the UK retailer's food business rose.

The lower profits came as M&S incurred higher operating costs and as sales of general merchandise fell.

However, shares in the retailer were up in early trading after M&S cut its estimate for capex spending for the new financial year.

M&S booked a 6.5% drop in net profit to GBP458m for the year to 30 March. Higher operating and finance costs weighed on M&S's bottom line, as did the expected fall in annual sales of general merchandise.

The retailer said its food business "outperformed" the market, with sales up 3.9%. Like-for-like sales increased 1.7%. Gross margins from M&S's food business were up 35 basis points at 31.7%. The retailer cited "improved buying" and "better management of promotional spend", which it said had offset commodity inflation.

Looking ahead, M&S forecast gross margins would be up 30-50 basis points, with a "similar range" in food and general merchandise. Inflation and volume growth mean operating costs are expected to rise 3.5%.

However, M&S has forecast it will spend GBP775m on capex, down from earlier guidance of GBP850m.

Shares in M&S were up 2.75% at 452.6p at 09:20 BST.

Click here for the full stock exchange announcement and check back later for further coverage of M&S's results.