New M&S boss sets out reform agenda: quality and price

Let's start with the worst. It's no secret that the clothing and home business has been a thorn in M&S's side for the past few years. During the last year, like-for-like sales there dropped 2.9 per cent compared with a 0.2 per cent improvement in comparable food sales. Bosses blamed unseasonal weather patterns and resultant high levels of promotional activity for the slump which, along with impairment charges and various write-offs, accounted for the crash in statutory profit.

Mr Rowe doesn't need telling that M&S is losing market share in its clothing and home division, and he has a range of correcting measures. Specifically, improvements will be made to product quality and pricing, with less promotional activity and fewer seasonal sales. A new management team was appointed in September 2015 and some 300 products underwent a permanent price cut in the final quarter of the financial year. Encouragingly, margins across this division are improving - up 245 basis points to 55.1 per cent - thanks to better buying margins and more direct sourcing. Overall, this helped lift UK group margins by 75 basis points to 42.1 per cent.

Euro woes also took a toll on M&S's international business, which suffered a 2 per cent sales slip and a whopping 40 per cent slide in operating profit. But let's finish on a positive note: web-based sales rose by nearly a quarter year on year, with a record 7.4m customers shopping online during the period.

Forecasts from Peel Hunt are under review, but prior to these results analysts there expected pre-tax profit of £695m for the year ending March 2017, equating to EPS of 35.5p. That compares with £690m and 34.9p in FY2016.