Resurgent M&S beats forecast

LONDON, May 21 (Reuters) - Britain's top clothing retailer Marks & Spencer reported a 31 percent rise in profits for 2001/02 on Tuesday as one of the best known names on the high street furthered a year-long recovery.

The surge in pre-tax profits, which at 646.7 million pounds ($944.8 million) to March 30 came in above consensus forecasts of 630 million pounds, builds on a 10.6 percent like-for-like increase in sales posted in April for the fourth quarter, and a four percent increase for the year as a whole.

With sales figures out in the market for some weeks, investors focused on margins as a measure of how well M&S was converting its resurgent sales into profits. Clothing buying margins were up three percentage points.

Chairman and Chief Executive Officer Luc Vandevelde, who appears to be delivering on his strategy of improving profitability through rejuvenating core clothing lines and focusing on the supply chain, said: "We have made good progress and believe that we have turned the corner.''

But he conceded that booming high street spending had helped one of Britain's best known names on its way.

Shares in Marks & Spencer, which have outperformed the benchmark FTSE-100 index by 14 percent so far this year and by over 80 percent in the past 12 months, were indicated at 413 pence on Tuesday, steady on Monday's close.

Many brokers have downgraded their recommendations on Marks & Spencer, which at a P/E of about 20 on 2002/3 estimates is looking a little stretched.

M&S proposed paying a final dividend of 5.8 pence, bringing the total dividend for the year to 9.5 pence, up from nine pence for the 2000/1 financial year.