Marks & Spencer Group (MKS) reported a fall in pre-tax profits of 9% to £287.3 million this morning.
The company said that although consumer confidence had grown in the UK, this had not yet translated into more spending on the high street and the retailer retains its cautious outlook.
It was not all bad news however as net profit rose nearly 13% to £249.6 million and sales rose to £4.88 billion from £4.70 billion. This was due to food sales which grew 2.5%.
Other sectors were not as positive - with clothing sales falling for the ninth consecutive three-month period.
Chief executive at M&S Marc Bolland said the company was pleased with the progress made, given the high level of activity and a number of key projects launching this year.
"This has led to a higher level of additional costs, which while planned for, have impacted short-term results," he said.
Morningstar equity analysts consider Marks & Spencer to be overvalued - estimating the fair value of the company at £4.42 per share. The retailer is currently trading at around £4.87. The company has returned a total of 31% to shareholders this year, including a dividend yield of 3.49%.
Dow Jones reported that Marks and Spencer is in the midst of an expensive turnaround plan that it hopes will help reverse the declining fortunes of its clothing and homewares lines.
It has also invested heavily in store staffing and has incurred duplicative costs as it opens up a new distribution centre.