Shares in Marks & Spencer soared over 6pc yesterday even after it reported its lowest profits in four years.
Investors were buoyed by plans by the department store chain to reduce its capital expenditure and "evaluate future uses of cash, with a view to delivering improved shareholder returns".
The company – Britain's largest department store chain – revealed its new autumn and winter fashion lines last week. There were positive reviews of the range, which boosted the stock.
But Marks & Spencer, which is headed by chief executive Marc Bolland, said yesterday that underlying pre-tax profit fell 5.8pc to £665.2m (€781.2m) in the year to the end of March. That was still better than had been expected by analysts, who had pencilled in a figure of £663.3m (€779m). Sales edged 1.3pc higher to £10bn (€11.7bn) in the period.
But the retailer was hit by a 4.1pc slide in its like-for-like UK general merchandise sales, whole total UK like-for-like sales fell 1pc. Food sales in the UK rose 1.7pc on a like-for-like basis.
International sales climbed 4.5pc on a constant currency basis and were up 0.9pc on a reported basis.
"Despite continuing tough trading conditions impacting the full-year performance in the Czech Republic and the Republic of Ireland, there was an improvement in trend in the second half of the year," said the retailer.
"We are working hard to get the general merchandise performance back on track," said Mr Bolland. "We have already made progress in our operational execution, and our new autumn/winter ranges have received a positive reaction."
"It's all about autumn and winter," said John Stevenson, an analyst at Peel Hunt.
Mr Bolland needs to demonstrate that the new clothing ranges can lead to improved sales, said Mr Stevenson.
"It's a big job and a big job comes with pressure," added Mr Bolland.