Marks and Spencer Group's profits fell in the first half, as the retailer faced additional headwinds in its food business and continued the struggle to boost clothing sales.
The group also confirmed reports that its chief financial officer, Helen Weir, will leave the company in due course.
Shares in the company rose 3.5 per cent this morning.
Group revenue for the six months to 30 September grew 2.6 per cent to £5.1bn, but pre-tax profits sank 5.3 per cent to £219m.
Like-for-like sales of food dropped 0.1 per cent. Sales in clothing and home fell 0.7 per cent for the full period, but the decline slowed in the second quarter to 0.1 per cent compared to 1.2 per cent in the first quarter.
Earnings per share jumped to 5.2p from 1p last year, while the interim dividend was kept flat at 6.8p.
Why it's interesting
While the decline in the retailer's clothing sales now shows signs of halting, investors will likely be concerned by the additional pressure on M&S's food business, which has up until recently been a star performer.
Chief executive Steve Rowe said this morning that the company recognised there were "stronger headwinds" facing food. While revenue increased 4.4 per cent in the division due to new store openings and an increase in the amount of floorspace given to food, profitability was down. Gross margin dropped 130bps thanks to inflation.
The group said it now plans to reposition the food business, including slowing a previously-planned expansion of its Simply Food stores.
M&S is also set to accelerate its space rationalisation plan, which has seen less space dedicated to clothing in stores and more given to food. This will continue at a projected rate of a 15 per cent reduction for clothing and home space and a five per cent increase for food.
Additional costs were heaped onto the group's UK business due to new space and a big bill for pension and pay changes, pushing UK costs up 4.2 per cent.
The departure of chief financial officer Helen Weir is just one of the latest changes to M&S's top team, after Halfords chief Jill McDonald was drafted in to run the clothing business and the departure of Jo Jenkins to head up White Stuff.
What M&S said
Steve Rowe said:
"The business still has many structural issues to tackle as we embark on the next five years of our transformation, in the context of a very challenging retail and consumer environment. Today we are accelerating our plans to build a business with sustainable, profitable growth, making M&S special again."