LONDON (AP) — British food and clothing retailer Marks & Spencer said Tuesday that net profit fell by 9 percent in the first half of its financial year as operating costs rose faster than revenue.
Shares rose, however, as the company reported an improvement in results in the last three months of the period and progress on sprucing up its stores.
Marks & Spencer said pretax profit of 227 million pounds ($363 million) for the six months ending Sept. 30 compared to 252 million pounds a year earlier.
Sales in the period were up 0.9 percent, at 4.7 billion pounds. U.K. operating costs were up 2.9 percent.
M&S was cautious about the outlook, saying recent trading had been volatile.
Shares were up 1.6 percent at 394 pence in early trading in London.
"Despite posting profits towards the upper end of expectations, M&S remains a work in progress," said Richard Hunter, head of equities at Hagreaves Lansdown Stockbrokers. He rated the shares as "hold."
Analysts at Shore Capital, however, reaffirmed their buy rating. "We are encouraged to see management guide to slightly better outcomes than previously expected on gross margins and costs," they said.
Marks & Spencer said total group sales were down 0.7 percent in the first quarter but were up 2.5 percent in the second quarter. International sales were up 3.6 percent in the first half.
The company said its restyled "concept" stores were outperforming the rest of its U.K. outlets, which are also due for upgrading by the end of next year.