Marks & Spencer Share News (MKS)

High Street giant Marks and Spencer saw profits dive last year and things are not looking much brighter this year with the retailer slashing its short-term sales growth targets.Profits dropped by 15.7% in the year ended March 31st but, the full-year dividend was maintained at 17p per share, which could be explain the slight share price rise in early trade on Tuesday - shares were trading 0.65% higher at 340.4p in the opening minutes.Statutory pre-tax profit fell from £780.6m to £658m as non-underlying profit items had a £47.9m adverse impact, compared with a £66.3m gain the year before. Nevertheless, the market consensus estimate was for £693m. Non-underlying profit items included the full write-off of the Greece Group goodwill (£34.4m) and the impairment of some store assets in the Greece Group (£10.5m). On an underlying basis, pre-tax profit fell by just 1.2% from £714.3m to £705.9m, 2% ahead of consensus forecasts. Broker Investec pointed out in a research note this morning that the beat was "entirely due to the contribution from M&S Money and a lower interest charge", but not an improvement in the underlying performance.Group revenue increased by 2% from £9,740.3m to £9.934,3m, shy of the £9.97bn forecast, as strength in Food and International sales was met with weakness in General Merchandise. Like-for-like (LFL) sales in the UK increased by 0.3% helped by strength in Food, where LFL sales increased by 2.1%. However, General Merchandise LFL fell by 1.8% - strong performances were seen in Lingerie, Menswear and Kidswear but Womenswear and Home saw a more mixed performance with the latter affected by the group's decision to exit the technology market.The group had expected to grow revenues by £1.5-2.5bn per annum for three years as announced in November 2010 but has now cut that targeted growth to £1.1-1.7bn "as a result of the deterioration in the economic environment since we set out our plan".The UK gross margin fell 30 basis points (bp) to 40.8% as growth in Food margins were offset by General Merchandise as a result of increased promotional activity, input price inflation and adverse currency pressure."Marks & Spencer performed well in a challenging economic environment, growing group sales by 2% and holding market share. We also made good progress with our strategic plans. We managed the business prudently with tight control of costs and capital investment, delivering earnings in line with last year, and substantial efficiency savings in our capital investment plans," said Chief Executive Marc Bolland.As for the 2012/13 fiscal year, the company expects the gross margin to increase by 0-25bp, while operating costs are anticipated to rise 3-5% as a result of increased space growth, depreciation, inflation and growth initiatives.BC