The chief executive of Marks and Spencer has said the retailer "can't rule out" price increases after a £60 million hit to its tax bill following Labour's budget, even as the company beat profit expectations thanks to strong food and clothing sales.

Stuart Machin, the M&S chief executive, said that UK chancellor Rachel Reeves' changes last week — an increase in employers' national insurance contributions and a reduction in the earnings threshold at which the tax kicks in — would take the retailer's annual tax bill to about £520 million.

Machin added that M&S "didn't quite see the double whammy coming up" and it was "definitely not planning to increase prices" but he could not rule out such a move, even though the company was now well versed in absorbing cost inflation after elevated levels in recent years.

The planned increase in the national living wage would add another £60 million to the group's costs, he said, but this had already largely been factored into its forecasts before the budget.

"We have to work incredibly hard [but] if we invest in quality, drive volume, keep our prices at fantastic value, that is the way to go," Machin said.

His comments came after the retailer, which has been seeking to revive its fortunes in recent years after decades of failed reinventions, reported a 17.2 per cent increase in profit before tax and adjusted items to £407.8 million in the six months to September 28, ahead of analysts' expectations, and as its turnaround gathers pace.

Food sales were up 8.1 per cent year on year to £4.2 billion, while clothing and home goods sales rose 4.7 per cent to £2 billion, also ahead of forecasts. Group revenue increased 5.7 per cent to £6.5 billion.

"Executing our strategy to 'reshape M&S for growth' has again delivered an increase in customers, sales value and volume, market share, profit and returns. Both food and clothing have now delivered market share growth for four consecutive years," Machin said.

Richard Chamberlain, a retail analyst at RBC Capital Markets, said M&S "has been making good progress with its food business, helped by an improved value for money perception, while its clothing offer has benefited from a stronger digital offer, third-party brands and a better bought range, with improvements in style, quality and value perception".

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