Clothing-to-food retailer Marks and Spencer said on Tuesday that net profit sank 43 percent in its first half as it grappled with tough trading conditions in the domestic market.
M&S, seen as a barometer of consumer sentiment, said net profit fell to 223.2 million pounds in the six months to September, compared with the same period last year.
Pre-tax profits before exceptional items fell 34.1 percent to 297.8 million pounds, it said in a results statement.
The pre-tax figure beat analysts forecasts, however, and helped send M&S shares jumping nine percent in early afternoon trade.
Group revenue inched up 0.8 percent to 4.22 billion pounds, boosted by a 24-percent jump in international sales, with strong growth at its franchise business in the Middle East, Russia and Turkey.
However, like-for-like sales back home -- which strip out the effect of new floor space -- slumped 5.7 percent in the first half.
"Market conditions and consumer confidence declined through the half, leading to reduced profits ... due to lower sales," M&S boss Stuart Rose said in the statement.
"Our plan is to manage the business through the economic downturn by tightly controlling costs, capital expenditure, cash flow and stock."
The economy is facing the likely prospect of a recession this year as it buckles under the weight of a slumping property market, sliding consumer spending and the impact of the global financial crisis.
"The economic environment has changed dramatically and we are now facing the most difficult retail conditions since the early 1990s," M&S said.
Rose said he was cautious about the outlook for the rest of the group's financial year to March 2009.
"Trading throughout October has been volatile with recent events in the financial markets and their impact on the wider economy further weakening consumer sentiment," he said.
"We remain cautious about the outlook for the remainder of the year."
The results were received well on the stock market despite concern about a looming recession.
At about 1:00pm, M&S shares were up 9.26 percent to 242 pence on the FTSE 100, which was up 2.65 percent at 4,560.76 points.
Recent official data showed that the economy shrank 0.5 percent in the three months to September compared with the previous quarter, marking the first contraction since 1992.
The technical definition of a recession is when an economy experiences two straight quarters of negative economic growth.
Copyright 2008  AFP European Edition
