Marks and Spencer
Retailer Marks and Spencer has had a sluggish turnaround under the leadership of Marc BollandGetty

Profit at Marks and Spencer fell by 22.7% in the six months to September, despite the fact that the retailer's website is finally taking off, contributing to a 34.2% surge in sales. The online performance is in contrast with sales in its high street stores, which fell slightly in the half year.

Overall like-for-like-sales at M&S were down 0.4% to £4.95bn (€6.98bn, $7.64bn), it reported on 4 November, against a retail environment that has been sluggish in the past few months, but overall experienced a rise in the half year. Food sales were up slightly, reporting a like-for-like increase of 0.2%.

"We delivered good underlying profit growth in the first half and made strong progress against our key priorities," said chief executive Marc Bolland.

"Our food business again outperformed the market by over three points as our focus on quality and innovation continues to set us apart. In general merchandise we decided to improve profitability by focusing on gross margin, delivering another significant increase, which in part resulted in slightly lower sales."

Marks and Spencer used to be considered a bellwether stock, but it is thought that its internal and structural problems have taken the upper hand and the retailer is no longer an indicator of the retail economy anymore.

The company has struggled to achieve a rise in clothing sales, as its merchandise is considered outdated and too expensive for the quality. Its "Simply Foods" stores have been outperforming competitors but are not enough to significantly lift sales.

As retailers prepare for the increase of many of their employees' pay because of the national living wage plans introduced by chancellor George Osborne, Marks and Spencer assured investors it would not affect the company's results as it is already paying £7.20 or more per hour to its workers.

Marks and Spencer's share price has surged by almost a third since November 2014. The retailer also announced it is increasing dividend, saying it reflects the good results.

"Not the easiest of halves given the weather, but the increased flexibility in M&S' business model stands out," Investec analyst Kate Calvert commented, adding that the profit was ahead of market expectation. "Management appears to be more confident on the general merchandise gross margin opportunity overall."