M&S profits fall despite overall sales up 0.4%.

Marks and Spencer (M&S) has reported a fall in profits of more than £302 million, to £768.9m for the 52 weeks to 28 March 2009, compared to the previous year.

The UK retailer has had a mixed year, with sales up by just 0.4%, boosted by an international sales increase of 25.9%, but in the UK it has seen its like-for-like sales drop by 5.9%.

As a result of the announcement M&S has said its share dividend will be cut to 15p a share for the year, down from 22p in the previous year.

However, all is not gloomy as M&S enjoyed another year as the leading clothing retailer by value and volume in the UK, and its market share in lingerie, home and kidswear all had a boost.

The company’s ‘Dine in for two for £10’ deal, along with other offers in its food range has helped to increase footfall to the stores’ food halls, particularly from those occasional customers.

Sir Stuart Rose, Chairman of M&S said: “During the year we acted decisively to meet the challenges of the economic downturn, responding quickly to the changing needs of our customers, managing costs tightly and protecting our balance sheet.

“Trading for the first seven weeks of the year has been broadly in line with trends experienced in the fourth quarter. We remain cautious about the outlook for the remainder of the year.

“As we start our 125th anniversary we do so with an unrivalled reputation for Quality, Value, Service, Innovation and Trust. These core values are as important today as they ever have been.”

M&S will be hoping its Penny Bazaar, where two million commemorative products will be priced at just one penny in celebration of its 125th birthday, will help boost sales of its other ranges, and of course help towards meeting its fundraising target of £1.25m for charities.