But Britain's biggest clothing retailer said it had not changed its view that the trading environment remains tough as it approaches the vital Christmas trading period.
Pretax profits, stated for the first time under IFRS accounting rules, came in almost 20 percent higher at 308 million pounds ($538 million). Analysts polled by Reuters had on average expected 305 million pounds, compared with a restated 258 million pounds a year ago.
In an unexpected about-turn M&S also said designer George Davies - who only three weeks ago said he would leave the company's Per Una division amid a spat over contract terms - would stay on and become chairman of the fashion unit next July.
"Three weeks is a long time in retail and there was no humble pie eaten," Rose said, describing how the two famously assertive and driven retailers had sat down for reconciliation talks last week.
"Life moves on. It's a bit like having a row with your girlfriend; if you still love her you still love her," Rose told a conference call, adding that Davies' million-pounds-a-year salary would not change for the time being.
M&S bought Per Una, one of the group's fastest-growing brands from founder Davies for 125 million pounds in October last year as part of Rose's strategy to fend off a 400 pence-per-share bid from billionaire Philip Green.
The value of the decision by Davies to stay on at the helm of Per Una until June and then become part-time chairman was not only symbolic, analyst Simon Irwin of J.P. Morgan said.
"The fact is that George Davies has a remarkable record of delivering. If he's still involved, then there is every reason to assume the brand will continue to deliver."
While UK retail sales eased slightly, the gross margin was 3.6 percentage points higher in what Irwin said was a good performance given the weak high-street environment.
"They're good numbers, fractionally ahead of forecasts. In terms of what they've produced over the year it's pretty impressive and the improvement in margins is pretty credible at the moment."
Most of the improvement in margins came from general merchandise - clothing and homewares - despite prices that have fallen by 10 percent for some ranges in murderous price competition among Britain's retailers.
In other management news Chief Executive Stuart Rose said Steven Sharp had been appointed to what is now a three-man executive board, where he will be responsible for marketing, e-commerce, store design and development. The executive troika now consists of Rose, Sharp and Finance Director Ian Dyson.
Louise Patten and Jeremy Darroch would also join the board of directors as non-executives in February, M&S said, as it announced a streamlining of the childrenswear business and the formation of a food development unit.
Last month the high street icon delivered its first same-store sales increase in eight quarters as UK turnover rose 1.3 percent on a like-for-like basis in the second quarter, reversing a 5.4 percent decline in the first.
Sales have been bolstered by store renovations - the new M&S look has been well-received by retail experts, and the company expects to revamp a further 40 to 50 stores this year to add to the 13 conversions during the first half.
This comes at a price, however, and M&S said it expected group capital expenditure to increase by up to half a billion pounds next year.
While sales growth among UK clothing retailers in particular has been hampered by unseasonably warm weather, there are signs a protracted decline may be bottoming out.
The Confederation of British Industry said last week a decline in retail sales volumes had slowed in October, and the British Retail Consortium said earlier same-store retail sales had fallen only slightly last month.
Shares in M&S, which have outperformed the general retailers' index by more than 36 percent this year, eased 1 percent to 430-3/4 pence by 1025 GMT, valuing the company at 7.22 billion pounds.
The company is trading on a multiple of 14.7 times estimated 2005-6 earnings, compared with a sector average of 14 times, according to Reuters Estimates. It set an interim dividend of 4.8 pence per share.