Fashion retailer Monsoon Plc has reported a 16% decline in full-year profits - citing tougher competition and saying there was little cause for immediate optimism in its outlook.

Profit before tax and exceptional items fell to GBP48.7m for the year, compared to 2006. The retailer announced in January that it had expected profits to be circa GBP55m, but then reduced expectations in March to between GBP46m and GBP49 m.

The company said that turnover had increased 9% to GBP530.5bn while basic earnings per share was down 14% to 17.18 pence.

Monsoon chairman Peter Simon said: "These are clearly very disappointing results and were caused by a number of factors - some within our control and others beyond it.

"We believe we have now identified all the issues that have caused this and are working hard to address them. In the coming year we will focus closely on our brands - product, merchandising and sourcing - to ensure we meet the challenge of ever-tougher competition.

"All of this work will hopefully come to fruition in the long-term but the current trading outlook gives us little cause for immediate optimism."

He added that Monsoon was conscious of the fact it is facing a deteriorating economic environment in the UK, with rising interest rates.

Monsoon opened a new 251,000 sq ft distribution centre in January to cater for an expanded store portfolio, but said it has experienced severe difficulties because insufficient time was set aside for training personnel and trialling new systems.

The company is currently looking for a replacement chief executive after Rose Foster left at the end of March, and is planning to move into a 125,000 sq ft new head office building in Notting Hill, West London, in May 2008.

Total sales for the seven weeks to 15 July 2007 were 5% down on the same period last year, while like-for-like sales were down 13%, Monsoon said.

In its outlook, Simon said that although the Monsoon and Accessorize stores faced increased and tougher competition from all sectors in the UK and international markets, he believed Monsoon would be successful in the long term.