Marks and Spencer has reported a 4.3% rise in annual profits to £1bn, but says it is cautious about its prospects for the next 12 months.
The retailer said like-for-like sales in the UK slipped in both food and clothing in the year to 29 March.
It described trading in the first seven weeks of the new financial year as "mixed", with April being "difficult".
M&S announced a big cut in bonuses for staff, after missing targets, but its store teams are set to share £12.8m.
Last year it paid out a record £91m in bonuses to its 75,000 staff.
M&S Chief Executive Stuart Rose answers your questions
The M&S profit is the largest at the firm since 1997/98.
But chief executive Stuart Rose told the BBC: "We did not do quite as well as we would have liked."
And analysts are predicting that profits in excess of £1bn will not be repeated this year as the store is hit by the consumer slowdown.
"Whilst headline numbers will no doubt be taken positively, this set of results is delaying the inevitable," said Collins Stewart analyst, Rob Mann.
"Margins are on the slide and it is not just a function of greater contribution from food. Cost inflation is heavy and gross margins are under increasing pressure," Mr Mann added.
The retailer's shares finished down 21 pence, or 5%, at 396p.
The firm was "well positioned" to compete in the challenging retail environment being experienced in the UK, Sir Stuart said.
"We expect market conditions to remain difficult for the foreseeable future and are managing our business accordingly," he said.
"Tight stock control and management of costs are a priority."
Overall sales were 5.1% higher at £9bn
But the results included a 1.7% fall in like-for-like sales during the final three months of the year - the second successive quarter of falling sales after a disappointing Christmas.
For the year as a whole, UK like-for-like sales fell 0.5%, with sales of general merchandise - which includes clothes - down 0.5% and food sales 0.4% lower.
M&S will be hoping to underpin any weakness in the UK environment with geographical diversification
Richard Hunter, Hargreaves Lansdown Stockbrokers
New stores and expansions helped M&S increased its shop floor space in the UK by 4.8% during the year, and it forecast growth of 5.5% in the current financial year.
Looking further afield, international sales were up by 16.8% to £712.9m, while operating profits grew 33% to £116.4m.
"With more space being added in Europe and India, and with a Shanghai store on the horizon, M&S will be hoping to underpin any weakness in the UK environment with this geographical diversification," said Richard Hunter of Hargreaves Lansdown Stockbrokers.
He added that an increase in the firm's dividend payout showed "a level of management confidence in the business which is not necessarily echoed by their outlook".
M&S investors have been upset by Sir Stuart's decision to promote himself to combine the roles of chief executive and chairman - which goes against City recommendations on corporate governance practice.
Sir Stuart has conceded the firm could have "done a better job of explaining" the decision.
Earlier this month, M&S rolled out a programme to charge 5p for single use food carrier bags.
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