British retailer Marks & Spencer said today it expects a short-term hit to profit as it pushes through a plan to turn around its underperforming clothing and homeware business, sending its shares sharply lower.
Steve Rowe, a 26-year company veteran, replaced Marc Bolland as boss of the 132-year-old company last month.
He moved up from the role he took only last July as head of the clothing division, which has seen five years of almost constant sales falls.
Fixing that business, which contributes about 60% of M&S's profit, is his priority.
Rowe's plan is to focus on improvements to the quality, fit and availability of M&S's ranges.
He will also lower prices, reduce the proportion of sales on promotion and increase store staffing levels.
"These actions, combined with the difficult trading conditions, will have an adverse effect on profit in the short term," he said.
"We are, however, confident that our commitment to delivering the right product, price and service will help return clothing and home sales to growth," he added.
Rowe said the changes, together with continued growth in M&S's food division, would provide the firm with a solid base for a long-term sustainable business.
But he cautioned it would take time for customers to notice improvements and change their shopping behaviour.
The M&S CEO forecast the current year would see a similar sales trend to 2015-16, when revenue rose 2.4% to £10.6 billion.
Underlying pretax profit came in at £689.6m for the year to April 2, beating analysts' average forecast of £673m and the £661.2m made in 2014-15.
Prior to today's update analysts' consensus for 2016-17 and 2017-18 was £710m and £744m respectively.
Rowe said additional strategic questions, including international, the UK store estate and organisation would be addressed in the autumn.
M&S is paying a full year dividend of 18.7 pence, up 3.9%, and also announced a special dividend of 4.6 pence for the first half of the 2016/17 year.