Marks & Spencer plans to test new store formats

– Good start to new financial year, but cautious on outlook 

British retailer Marks & Spencer plans to test new store formats more tailored to their localities as it looks to counter tough trading conditions and build on a 13 percent rise in annual profit. Britain's biggest clothing retailer, which also sells upmarket foods and homewares, said on Tuesday the new formats would sell products selected against several criteria, such as age and affluence of shoppers, and have better layout and signs.

It will start testing them from October.

Britain's retailers are mostly struggling as shoppers are hit by rising prices and austerity measures. Clothing chains are also facing soaring cotton prices.

"We have had a good start to the new financial year but we expect trading conditions in the year ahead to be challenging," Marks & Spencer (M&S) said, echoing comments from rivals.

The 127-year-old group, which serves 21 million Britons a week from around 700 stores and also has more than 320, mostly franchise, shops in 41 territories, said it made profit before tax and one-off items of 714.3 million pounds ($1.15 billion) in the year ended April 2.

That was just ahead of analysts' average forecast of 710 million in a company poll.

Revenues rose 4.2 percent to 9.3 billion pounds and the dividend was increased 13.3 percent to 17 pence a share.

M&S saw profits plunge from around 1 billion pounds at the start of the economic downturn. But it has outperformed rivals recently, helped by a drive to introduce new products like stormproof suits and French-inspired Bistro ready meals.

Investors are also warming to chief executive Marc Bolland's plan to revamp UK stores, expand online and overseas, and improve logistic and marketing, all of which have seen him make a string of high-profile management appointments.