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Last Updated: Tuesday, 23 May 2006, 08:34 GMT 09:34 UK
M&S unveils sharp rise in profits
Clothes from M&S Per Una range
M&S said it has been focusing on its womenswear
Marks and Spencer (M&S) has continued its turnaround, posting a sharp rise in full-year profits.

Pre-tax profits for the year to 1 April jumped 47% to 745.7m ($1.41bn) from 505.1m at the same time last year.

However, chief executive Stuart Rose played down the rise, saying there was still "much to do" to ensure long-term growth at the group.

M&S has been improving its clothing range and cutting costs as it battles a tough trading environment.

However, across-the-year clothing sales remained flat, as a drop in sales in the first six months of the year offset a strong performance in the second half.

Food focus

But food sales grew, with revenues up 7% overall and 3.6% on a like-for-like basis - which offsets the impact of new stores.

What they [customers] wanted from us was better values, whether it was from knickers right the way through to knitwear
Stuart Rose, M&S

The company opened a number of Simply Food outlets over the past year and has also been trying out a new Hot Food To Go take-away style format.

M&S has been concentrating on its food and womenswear offerings, in an effort to rebuild confidence in the brand.

As well as investing in store improvements, an award-winning advertising campaign featuring 1960s icon Twiggy has helped improve its image.

As a result, the number of people visiting its shops has risen by 350,000 a week to more than 15 million a week - and more of these shoppers are now spending in store.

'Respectable performance'

Mr Rose said the group's strategy of "listening to customers" had paid dividends.

M&S chief Stuart Rose
Mr Rose isn't ready to toast the turnaround with champagne just yet

"What they wanted from us was better values, whether it was from knickers right the way through to knitwear or indeed sausages or sandwiches, they want us to deliver fantastic products and fantastic value, and value for us is a function of price time quality," he told the BBC.

But he was unwilling to shout about the improvement - choosing instead to dub it a "respectable performance".

"We need to drive sales, grow market share, improve the performance from our existing stores and continue to buy better," Mr Rose said.

Judi Bevan, author of Marks & Spencer: What Went Wrong, said she believed the recovery at the company could be sustainable - providing Mr Rose remains at the helm.

Right track?

She added that Mr Rose had made a real difference after being brought into the group two years ago, as he had a good understanding of M&S customers and products.

"He's got the product right, got the pricing right and the advertising has brought people in," Ms Bevan said. But Richard Hunter, head of UK equities at Hargreaves Lansdown Stockbrokers, was more cautious.

While he welcomed the continuing strength in sales, it warned shareholders against raising their expectations too high and risking a drop in M&S shares, which have risen 22% in the last six months alone.

Mr Hunter added the "general view had cooled" on whether M&S could sustain the turnaround.

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