Marks & Spencer profits soar

Last Modified: 22 May 2007
By: Benjamin Cohen

Spurred on by high-profile advertising, Marks & Spencer made almost £1 billion last year - their highest profits in a decade.

The company, which plans to create 10,000 new jobs, is clearly delighted with its recovery. But the figures may tell a different story about the rest of the British economy.

Marks & Spencer is back in fashion. The most iconic store on the high street is no longer synonomus with dowdy dresses for uncool grandmothers.

If company boss Michael Rose's response seemed a little downbeat, it might be because he hasn't quite won back the confidence of the City. Shares fell almost 5 per cent on today's results.

Marks & Spencer is a famous, quintessentially British brand. Its stores sell everything from food to footware, lingerie to LCD TVs.

M&S figures act as a barometer for consumer spending across the rest of the economy.

And the breadth of range means the record sales announced today don't just tell us about the successful turnaround of Marks & Spencer. They also act as a barometer for consumer spending across the rest of the economy.

The year-on-year growth in retail sales is now at its highest level for three years. If successive interest rate rises don't slow spending, then what might benefit Marks & Spencer could bode badly for the government's inflation target.