PROFITS at Marks & Spencer dropped by 18.6 per cent as chief executive Steve Rowe warned that plans to turn the business around will hit short term profits. Share in the high street giant dropped 7.67 per cent in early morning trading.

Full year results at M&S showed an increase in revenues of 2.4 per cent to £10.6 billion. Underlying profits did grow, by 4 per cent, but this was hit by a number of factors, including a £50 million provision for mis-sold PPI insurance at M&S Bank. Profit before tax was £488m.

“We are investing to re-establish our price position by sharpening prices and to enhance service by putting more employees into our stores,” said Mr Rowe. “These actions, combined with the difficult trading conditions, will have an adverse effect on profit in the short term.”

As the company continues to grapple with its position as a modern clothing retailer, its food business continued to impress, outperformed a competitive market.

The group announced plans to put customers at the heart of its business, with immediate action being taken to recover and grow its clothing and home division.

Part of this growth strategy involves lowering prices and reducing the number of promotions. M&S said it would also enhanced customer experience with sharper ranges, better availability and investment in store staffing.