Clothing and food retailer Marks & Spencer reported underlying profit for the full year that managed to beat market expectations on Tuesday but still marked a steady decline for the U.K. bellwether.
Underlying profit before tax came in at £623 million ($1.05 billion), against a company poll forecast of £615 million. The figure marked a 3.9 percent decline from last year and the third consecutive year of decline in profit for the group.
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Group sales saw a 2.7 percent increase to £10.3 billion with like-for-like U.K. sales up 0.2 percent in general and higher by 1.7 percent for just its food products.
In Tuesday's statement M&S said its board was to recommend a final dividend of 10.8 pence per share, resulting in a full year dividend of 17.0 pence per share, the same level as last year.
"We are focused on improving our performance in general merchandise and were pleased to see early signs of improvement. Our food business had a very strong year, consistently outperforming the market," Chief Executive Marc Bolland said in a press release.
Shares in the firm were lower by 2.4 percent at the open on Tuesday. Analysts at Citi said that the combination of lower space growth, higher operating expenses growth and the potential online disruption from the recent internet platform launch would weigh on shares and affect future profit estimates.
The disappointing results come at the end of a three-year investment plan put in place by Bolland. Since 2010 Bolland has spent £2.3 billion on a turnaround program that has involved revamping its stores, redesigning its products, launching a new internet platform and increasing its international reach.
Bolland said the company was making "solid progress on this journey" and was now focused on the delivery of this plan.
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The U.K. company still has sizeable slice of the U.K. market with 750 domestic stores. It has, however, lost its way in recent years, according to many analysts, with questions remaining over its brand, its online strategy and its clothing ranges. Shares of Marks & Spencer closed at 451 pence on Monday afternoon, barely moving from the same level last year. Meanwhile, rivals like Next have seen their shares move higher amid a broader market rally.
With its investment plan at an end, Marks & Spencer indicated that capital expenditure is expected to drop to around £500 million per year in each of the next three years. It added that it would now look to deliver a significant improvement in gross margin for its general merchandise.
"We are focused on improving free cash flow," the company said. The board is committed to maintaining a progressive dividend policy with dividends broadly twice covered by earnings."