Marks & Spencer said it was cautious about the outlook for consumers ahead of expected tax rises as it met forecasts with a 4.6 per cent rise in annual profit.
The 126-year-old group, which also sells food and homewares, said today it had made a satisfactory start to the first quarter of its new financial year.
"Consumers are naturally concerned about any impact of the Budget on June 22nd," it said, referring to plans by Britain's new coalition government to announce steps to cut a record state deficit next month.
"We therefore remain cautious about the outlook for the year ahead."
Marks & Spencer (M&S), which has more than 650 stores in Britain and about 300 shops overseas, said it made profit before tax and one-off items of £632.5 million in the 52 weeks ended March 27th.
That compares with analysts' average forecast of £628 million in a company poll, and underscores the challenges facing new chief executive Marc Bolland as he looked to rebuild profits towards the £1 billion achieved in 2007-8.
Sales rose 3.2 per cent to £9.3 billion, and M&S said its clothing market share rose 30 basis points to 11 per cent.
M%S had a particularly tough recession, hit by the challenge from clothing discounters like Primark and admitting it was too slow to adapt its upmarket food business.
It has fought back, introducing lower-priced "Wise Buys" on food and new clothing ranges like Indigo.
But the profit rise at M&S falls short of the increases posted by rivals like Next, John Lewis and Debenhams.
M&S cut its annual dividend to 15 pence a share from 17.8 pence the year before, in line with previous guidance.
Its shares have lagged the STOXX 600 European retail index by 16 per cent this year and closed yesterday at 333.5 pence, valuing the firm at about £5.2 billion.
Reuters