(Bloomberg) -- Marks & Spencer Group Plc said it’s in the strongest financial health since 1997 as the British retailer’s latest turnaround finally gains ground.

The clothing and homewares group reported better-than-expected pretax profit of £673 million ($857 million) last year and forecast further progress in the current financial year. It will also pay a full-year dividend of 3 pence a share — the first since 2019.

M&S said both its food and clothing divisions have delivered 12 consecutive quarters of sales growth, helped by initiatives to improve the quality and pricing of its goods.

Cost-cutting measures and improvements in the stores and supply chain are making operations more efficient, it added. M&S ended the year with net funds of about £46 million, excluding lease liabilities, which it said is the best balance sheet position in decades.

Marks & Spencer shares rose 8.4% as of 10:03 a.m. in London, taking its market capitalization to about £6.1 billion. That’s more than double the market value of its joint venture partner Ocado Group Plc. 

The turnaround of M&S, which has been fighting to improve its performance since the turn of the millennium, is being led by Chief Executive Officer Stuart Machin and Chairman Archie Norman. Past leadership teams struggled to revive sales as the retailer lagged in adapting to the rise of online shopping.

M&S has tried to broaden the appeal of its clothing beyond older shoppers. A campaign in March starred Portuguese model Sara Sampaio — best known for her work with Victoria’s Secret — and saw clothing and home sales rise 5.3% compared with the prior period. Past advertisements have featured actress Sienna Miller and singer Sophie Ellis-Bextor.

“The good news here is every category was in growth,” Machin said on a call with reporters. “Volume and value growth was ahead of the market as we invested in style and quality and that resonated with customers.” 

He added that 30% of the company’s lingerie customers are now under the age of 30 which is twice as high as last year. 

Comparable food sales rose 11.3% last year with volumes rising as the retailer gained new customers after investing in lowering prices and offering more items for full weekly food shopping. M&S said profit in the food division reached nearly £400 million last year, compared with £248 million the year before. 

M&S said nearly 5,000 food items are now available on Ocado.com and although the venture made a “disappointing” loss last year, the revenue improvement now taking place under the new management team is marked, the company said. 

Results at M&S show a very strong end to last year, which was broad-based across both clothing and home, said Frederick Wild, analyst at Jefferies. “Equally critical is the upbeat outlook. This is more front-foot than usual.”

Although M&S is still nowhere near making more than £1 billion of profit as it did in 1997, Machin said he was confident he was now running a business where profit will continue to rise. 

“I’ve always said we’re a growth business,” he said. 

--With assistance from Joel Leon and Lisa Pham.

(Updates with details from management call.)

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