Marks and Spencer have beaten forecasts with a 4.6 pct rise in pretax profits around £632.5m.
The group, which dates back to 1884, when Polish immigrant Michael Marks set up his first market stall, is under pressure to meet market expectations in a time when consumer confidence is at a low as retail clothing and food sales have shown very little growth in first quarter.
The company says that merchandise sales on a comparable stores basis rose 1.6 percent while food sales were up 0.3 percent.
"Marks & Spencer has had a good year" said Chairman Sir Stewart Rose, "In Food, we returned to positive like-for-like growth for the first time in two years as we improved our value and innovation while maintaining our unrivalled quality."
Revenue, which includes a strong fourth quarter (including Christmas sale) swung back to growth of 5.3 percent. Pretax profit, excluding property disposals, rose 4.6 percent.
Tony Shiret, analyst at Credit Suisse, said in a preview before the release that new CEO Marc Bolland has a tough challenge to bring the company into a new 'younger' market.
He suggested that the food and clothing retailer should cater for 'young mothers' in some of its smaller store chains to give it a more 'credible fashion' offering whilst still delivering a "better quality shopping experience" for its existing 'older' core customers in larger town stores.
Speaking before the results, he said: "With the 30 to 55-year old group, they need to be holding their ground but they have not".
Marc, the new CEO comes from a background of food retail (Morrisons) and international business (Heineken) and Sir Stewart Rose, Chairman of the Group and former Chief Executive end his rein in May after being hired in 2004 to fight off a takeover by Philip Green.
Ian Dyson, finance director since 2004, has also departed.
The group has grown back to one billion pound profits in 2008 for the first time since it peaked at £1.155 bn in the late 1990's.
However, this year's pretax profits remain lower than this, and worries over pensions deficit and increasing competition from rivals such as New Look and Waitrose leaves the group in a 'transitional' phase:
"The concern would be that Bolland will re-present the existing business but not deliver long-term strategic change." said Tony.
Shares in Marks and Spencer fell 2 percent today to 326.90 p (8:21 am) after rising for most of yesterday.
Richard Hunter, Head of UK Equities at Hargreaves Lansdown Stockbrokers, commented "Whilst the numbers were towards the top end of expectations, there is little to excite within the statement, particularly given the wider market languor.
General sales showed a decent increase, whilst the growth in food sales was rather modest. The competition from the discount brands continues to challenge the company, whilst the possible retrenchment of the consumer after the emergency Budget would provide additional headwinds. The company itself is understandably guarded about the outlook and the changes in key management positions threaten to undermine a smooth recovery.
There are some reasons for optimism, such as the company's desire to consolidate its brand strength. From an investment perspective, the current yield of 4.5% is attractive in the current environment and the shares have slightly outperformed the wider FTSE100 over the last three months. However, with some tough times ahead and the current management unproven, the jury remains out and the general market view is no more than a hold."