The clothing and homewares group reported better-than-expected pretax profit of £673 million ($857 million) last year and forecast further progress in the current financial year. It will also pay a full-year dividend of 3 pence a share — the first since 2019.

M&S said both its food and clothing divisions have delivered 12 consecutive quarters of sales growth, helped by initiatives to improve the quality and pricing of its goods.

Cost-cutting measures and improvements in the stores and supply chain are making operations more efficient, it added. M&S ended the year with net funds of about £46 million, excluding lease liabilities, which it said is the best balance sheet position in decades.

M&S results show a very strong end to last year, which was broad-based across both clothing and home, said Frederick Wild, analyst at Jefferies. “Equally critical is the upbeat outlook. This is more front-foot than usual.”

Shares of M&S rose more than 8% in early trading in London. The stock has risen more than 65% in the past year.

The turnaround of M&S, which has been fighting to improve its performance since the turn of the millennium, is being led by Chief Executive Officer Stuart Machin and Chairman Archie Norman. Past leadership teams struggled to revive sales as the retailer lagged in adapting to the rise of online shopping.

M&S has tried to broaden the appeal of its clothing beyond older shoppers. A campaign in March starred Portuguese model Sara Sampaio — best known for her work with Victoria’s Secret — and saw clothing and home sales rise 5.3% compared with the prior period. Past adverts have featured actress Sienna Miller and singer Sophie Ellis-Bextor.

Comparable food sales rose 11.3% last year with volumes rising as the retailer gained new customers and broadened its appeal, offering more items for a full weekly food shop. M&S said profit in the food division reached nearly £400 million, compared with £248 million the year before. 

M&S said nearly 5,000 food items are now available on Ocado.com — its retail joint venture with Ocado Group. Although Ocado Retail made a loss last year which was “disappointing,” M&S said the revenue improvement under the new management team has been marked. 

“In a world where several operators have exited the online food delivery market, the potential competitive advantages of the M&S/Ocado combination are increasingly evident,” the retailer said.