M&S profit hits £1 billion

Marks and Spencer's annual profits hit £1 billion but the retailer cut its staff bonus, having failed to meet internal targets, and warned a slowdown in consumer spending could run until autumn next year.

Britain's largest clothing retailer said yesterday adjusted pre-tax profits rose 4.3 per cent to £1.007 billion, slightly higher than some analysts' expectations due to a lower-than-expected interest charge.

Chief executive officer Stuart Rose said he expected market conditions to remain difficult until "summer or autumn 2009" and indicated profit before tax was likely to fall this year.

"As a retailer we would welcome a reduction in interest rates and we would welcome the government to give more confidence to consumers," Mr Rose said.

M&S, a bellwether for the state of consumer spending, had failed to meet undisclosed internal targets and Mr Rose said he would forgo a bonus after a £2.6 million payout last year, as would other top management.

Instead, the company would make a one-off discretionary payment of £16.8 million to be shared by both store staff and employees in its well-performing international and online business units.

Credit Suisse analyst Tony Shiret said he believed Marks and Spencer's annual profits could fall to £800 million to £900 million this financial year, but the worsening consumer market that could still make that hard to achieve.