MARKS & Spencer’s restructure is “yielding results” with a rise in sales in the face of pressure on customer finances and gaining a positive response from the City.

The high street giant saw its profit dip over the past year on the back of higher costs, but it was nevertheless better than expected and shares in the group shot up by as much as 13% in early trading, hitting their highest for more than a year.

The chain said that sales grew in both its clothing and homeware, and food divisions over the year to April.

Analyst Zoe Gillespie, investment manager at RBC Brewin Dolphin, said: “These are not just great results – they are M&S results.

“M&S has been going through a seemingly never-ending process of restructuring itself for the future, but that long journey appears to be yielding results with a set of numbers that have beaten forecasts. Sales are growing more or less across the group, with the notable exception of Ocado Retail, which has begun its own ‘reset’.”

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Executives at M&S hailed the performance as evidence of progress from the retailer's turnaround plan, which has seen it shut dozens of its larger stores amid an overhaul of its store portfolio.

It said earlier that it is speeding up a major shake-up of its shops estate, which will result in the closure of 67 larger branches as part of long-term plans to axe 110 stores under a sweeping overhaul.

The company closed its Sauchiehall Street shop in Glasgow last year and its store in East Kilbride town centre at the start of this year. It currently has around 100 stores in Scotland.

M&S said better clothing ranges and refurbished stores played a significant part in the improvement in trading.

Total revenues for the business grew by 9.6% to £11.9 billion set against the previous year.

Clothing and home sales lifted by 11.5% to £3.72bn, after a significant rise in store sales, with shoppers returning to the high street after the impact of Covid-19.

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Sales in its food operation grew by 8.7% to £7.22bn, against the year prior.

M&S also told shareholders it has witnessed a "good start" to the new financial year, despite an uncertain outlook for consumer spending. It comes amid continued high levels of inflation for British households.

Fresh figures from the Office for National Statistics on Wednesday showed that food CPI (Consumer Prices Index) inflation struck 19.3% last month, although this reflected a slight drop against March's data.

Stuart Machin, Marks & Spencer chief executive, said the company expects recent price increases "to soften" but stressed there is still inflationary pressure in its supply chain due to higher labour costs and some commodity price rises.

He said: "Yes, we do expect things to get a bit better and we have already been able to reduce the price of some items like milk.

"As soon as the cost of products comes down we will pass that on to the customer."

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He continued: "We have some products coming down from peaks, but for other things like eggs they are still significantly higher than they were a year ago.

"I'm sure things will recede and get a bit better. There is still uncertainty but hopefully we will see more of this by autumn."

It came as the London-listed company posted a profit before tax and adjusting items of £482 million for the year, down from £522.9m last year.

The retailer said the figure, which was above analyst predictions, was partly lower due to the loss of pandemic-era business rates relief from the government.

It also highlighted continued cost inflation for both clothing and food divisions.

The company said it also expects to face over £50m of energy cost rises and over £100m in staff pay increases over the coming year, but stressed plans to offset this by its cost-cutting plan designed to secure a further £150m a year.

Mr Machin added: "One year in, our strategy to reshape M&S for growth has driven sustained trading momentum, with both businesses continuing to grow sales and market share.”

Neil Shah, of Edison Group, pointed to the pre-tax profits drop of 7.8%, "that was belied by a 9.9% growth in sales”, adding: “These results do not quite bear out the company’s apocalyptic warnings of a ‘gathering storm’ in its 2022 report, which announced a fall in profit of 24%.”

Shares in Mark & Spencer closed up 12.93%, or 21.15p, at 184.75p.