M&S breaks pounds 1bn barrier

Marks and Spencer is set to pass the pounds 1bn profit mark for the first time when it reports full-year profits on Tuesday, even though competition among clothing retailers is stiffening.

Britain's largest clothing retailer is expected to report profits for the year to March of pounds 1.11bn - an 11 per cent increase on last year. This is similar to the 12 per cent growth that rival Next registered but is trailing a long way behind Burton, which last week reported a 23 per cent rise in half-year profits.

There is concern also that M&S's share of the pounds 70bn British food retail market may be slipping. The company warned of lower-than-expected growth in food sales in January. Rival supermarket chains that have cut prices and introduced similar quality product lines are capturing market share.

In the pounds 23bn clothing market, rivals such as Burton, Next, Alexon and French Connection have reported improved sales this year through catching fashion trends.

For although shoppers have more money to spend as the economy picks up, they are becoming more selective over what they buy and where.

Skilful management at M&S means the group has avoided expensive mistakes that have pushed chains such as House of Fraser and Etam to losses in recent years.

"The speed at which M&S puts its mistakes right marks it out," said Robert Clark, director of London-based consultants Corporate Intelligence on Retailing.

Like other high-street retailers, M&S is battling against increased consumer interest in leisure activities that is cutting shopping time, especially among men.

"Leisure spending is rising faster than retail spending," said Mr Clark. "Retailers must hitch themselves to leisure in any way they can to maximise sales."

M&S has responded by introducing golf and jogging wear, as well as picnic equipment and other outdoor goods to its stores.