Marks & Spencer has a big problem - it's still not fashionable

High street retailer Marks & Spencer has finally managed to end four year's of falling profits, announcing this morning that full-year pre-tax profit rose by 6.1% to £661.2 million.

While profits improved, this was largely down to cutting costs, particularly in its supply chain, rather than growth. Revenue was near-stagnant, rising by just 0.4% to £10.31 billion. But if you dive below that headline number, it's clear that things are far from fixed at M&S, which has been struggling for years.

And Marks & Spencer's crucial clothing line, once the centrepiece of the business, is still in a terrible state.

Sales at the "general merchandise" division, which is mainly clothing, fell by 2.5% in the year and 3.1% if you don't include sales from new shops opened during the period. The retailer admitted the figure was "disappointing".

It's particularly damning when you consider how hard M&S has working to reinvent itself as a fashionable brand, particularly for women who traditionally form the backbone of its customer base.

Marks & Spencer has launched several big budget advertising campaigns over the last year in a bid to shift its image as a dowdy shop for grannies. It has also trumpeted the appeal of key pieces such as the suede skirt and is partnering with hip brands for things like trainers.

Clothing sales did return to growth in the final quarter of the year, but only by 0.7% and it's not clear if this trend will continue. The 2.5% fall across the year shows that even if it does, Marks & Spencer has a long way to go to repair its fashion business.

If Marks & Spencer can't fix the problems at its clothing business, it won't be able to grow revenues. And if it can't grow revenues, it's only a matter of time before profit begins to fall again. There are only so many efficiencies you can make and costs you can cut.