LONDON, Nov 4: Britain's top clothing retailer Marks and Spencer Plc on Tuesday reported a five per cent increase in first-half profits and unveiled a 2.1 billion pound ($3.5 billion) global expansion, expected to create thousands of new jobs.

The retailer, which already has stores across Europe, the Far East and North America, said it had embarked on an unprecedented expansion of space and products around the world.

Chairman Richard Greenbury said the group's investment would add 4.5 million square feet (418,000 square metres) of new space by the end of the century."We are entering a period of accelerated footage and product expansion in the UK and overseas, so by the year 2000 will be well on our way to establishing a global business," he said in a statement.

But the investment, plus the impact of the strong pound on overseas earnings and budget changes affecting pension costs dragged profits below market predictions.

Pretax profits in the half year to September 27 rose five per cent to 452.3 million pounds, against forecasts for an increase to 460 million. Sales were up by six per cent to 3.7 billion and the dividend was increased by nine per cent to 3.6 pence a share.M&S's shares fell as retail analysts cut full year profit forecasts. The shares fell 17.5 pence to 594 pence before recovering slightly to 599P by 1030 GMT.

Analyst Tony Shiret at Barclays de Zoete Wedd said he would reduce his forecast for 1997-98 to 1,165 million pounds from 1,185 million.

"Overall the figures are fine," he said, adding that market expectations had become over-optimistic at a time when the company is investing heavily."It's not very reasonable to expect more than a five per cent increase when marks is in an expansion phase," he said.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.