Struggling department store chain Marks & Spencer Group Plc has revealed a 19 per cent plummet in underlying full-year profit and warned of a 'challenging' outlook.

Full-year profit before tax and exceptional items totalled £618.5 million compared with £805m the year before, while total turnover was £7.94 billion compared with £8.30bn a year ago. The retailer had predicted full-year profit of between £610m and £625m.

Chief executive Stuart Rose said: "The Group's financial performance for the year was disappointing…. Despite reducing stocks and commitment by some £1.3bn over the year, we had to take a high level of markdowns which severely impacted our operating profit. A new buying process and stock controls should enable us to deliver reduced markdowns in the coming year.Our focus now is on profitable full price sales."

Full-year clothing sales dropped 3.1 per cent compared to last year, driven by a continued poor performance of women's wear, although the Per Una range continued to sell well.

The company said that its lingerie division had suffered as the range was too complex, but that the children's wear market had become steady for the first time in three years during the last quarter of the year.

M&S continued: "All product groups suffered from inconsistent price architecture. Opening price points are now benchmarked against key competitors and appropriate good, better and best pricing is being introduced across all ranges, giving more real choice for all our customers.

"The outlook remains challenging, with tough economic and competitive conditions expected to continue…We have made good progress, however, there remains much to do."