Rose plays down fears as M&S hits £1.1bn

M&S's status as a bellwether for the health of the High Street means its results attract intense scrutiny, with analysts looking for any sign of trouble.

Profits in the year to the end of March jumped 20% to £1.12 billion, the first time in a decade the £1 billion mark has been breached. The dividend is lifted a tasty 23% to 22.5p.

But there is a growing feeling this year will be as good as its gets for some time. M&S admits it missed internal targets for the year, meaning Sir Stuart and other executives get no bonus. Shop staff share £12.8 million, against £91 million last time.

M&S said market conditions will "rem-ain difficult for the foreseeable future", with trading lately "mixed" after a tough April. Perhaps alarmingly, the debt on the balance sheet jumped from £1.9 billion to £3 billion. Sir Stuart claims the business remains under-leveraged. He said: "We are confident for the long term. We are half-full rather than half-empty."

Tony Shiret at Credit Suisse is more pessimistic, predicting M&S profits will fall to £750 million in two years.

Rose responded: "Analysts will write what they want to write. The question is, do we believe that this business has got legs? Tony has been a consistent critic and we can't understand where he comes from sometimes."

M&S has ambitious expansion plans for food, online and internationally.

"With a machine like ours, if you put the brakes on it takes 18 months to get accelerating again. That was the mistake we made in the past and we paid the price for it," said Rose.

The firmwas recently in a corporate governance storm after a decision to move Rose from chief executive to executive chairman - a position critics say gives him too much power. The board is seeking a successor as chief executive.

Rose said: "We understand the corporate governance rules and we don't flout them knowingly. It was a tough but right decision."

The food business has grown strongly, but the company thinks it can take more market share. International sales rose 17% to £713 million, accounting for £116 million of the profits.

The shares, which have had a bad run lately, today gained 14p to 431p.