Retailer Marks and Spencer has warned that the financial squeeze on UK consumers will hit profit growth this year.

One of Britain’s best known retailers said that although trading had been encouraging since early April, it expected the financial pressures on customers to deepen over the rest of the year.

“We expect the decline in real incomes to sharpen in the second half and endure for at least the remainder of the financial year,” the FTSE 250 retailer said in its full-year results statement on Wednesday.

M&S said that a combination of the cost of investing in new capacity at Ocado retail, the absence of £102mn of Russian sales and a lack of relief on business rates meant it has started the current financial year at a “lower adjusted profit base”.

“Given the increasing cost pressures and consumer uncertainty we do not currently expect to progress from this lower profit base in 2022/23,” the retailer added.

The cautious outlook from M&S comes after chief executive Steve Rowe, who steps down later his month after six years, had made progress in reviving the group’s fortunes.

A better performance from its revamped food business and improved sales of clothing and homewear allowed the retailer to twice upgrade its forecasts during its last financial year, which ended in early April.

In the 12 months to April 2, M&S reported pre-tax profit, excluding some items, of £522mn, matching analysts’ forecasts and up from £50mn in the previous financial year. Revenues were £10.8bn, up 7 per cent from last year.

The group said net debt also fell from £1.1bn last year to £420mn, excluding lease liabilities. As expected, M&S did not pay a dividend.

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