Marks & Spencer has reported a 6.1% increase in underlying profit before tax to £661.2m for the year to March 31, but clothing and general merchandise like-for-like sales fell 3.1%.
Group sales rose 0.4% to £10.3bn, but online dropped 2%.
Gross margin improved by 190 basis points thanks to “significant sourcing gains”, and is expected to increase by a further 150 to 200 basis points in the next 12 months.
Total general merchandise sales were down 2.5%. The retailer said its fashion sales - which it did not separate out from the rest of general merchandise - did not meet expectations and blamed “the third warmest autumn on record”, given its high market share in winter categories such as knitwear and coats.
It comes after M&S reported a 1.2% increase in fashion sales for the 13 weeks to March 28, breaking a cycle of 14 consecutive quarters in decline. The improvement, which saw like-for-like fashion sales edging up by 0.6%, was credited to better “product quality and styling”.
Chief executive Marc Bolland said: “In general merchandise we significantly increased the gross margin, and, while sales performance was below our expectations, we returned to growth in the fourth quarter. We continued to control costs and capital expenditure tightly, resulting in significantly improved free cash flow.
“We are transforming M&S into a stronger, more agile business – putting the right infrastructure, capabilities and talent in place to drive our strategic priorities.”