Marks & Spencer is going downmarket to try and rescue its clothing business

Marks & Spencer put out another bad set of results on Wednesday - something that has become a tradition for the struggling retailer.

Annual sales at M&S were up 2.4% to £10.4 billion ($15.2 billion) but pre-tax profit collapsed by 19.5% to £483.3 million, in the 52 weeks ending on March 26, this year.

As usual, it is the food business that is performing well but the clothing and home unit, the traditional backbone of the business, is still struggling. Food revenue is up 3.6% on last year but clothing and home revenue is down 2.2%.

CEO Steve Rowe says in the results statement:

Our results last year were mixed. We continued to outperform on Food but we underperformed on Clothing & Home sales. This is not satisfactory and today we are outlining our initial plans to address the issues and to position Marks & Spencer to deliver profitable sales growth.

Rowe, a 25-year M&S veteran and former head of general merchandise, was brought in to replace former CEO Marc Bolland in January. Bolland was ousted after a dreadful set of Christmas numbers. Bolland has been CEO since 2009 but presided over 14 straight quarters - three and a half years - of declining sales in general merchandise.

To try and rescue the clothing division, Rowe is completely junking Bolland's strategy. Bolland wanted to turn M&S into a relatively high-fashion brand, pinning its hoping on key "pieces" in each season's collection such as a much-vaunted blue suede skirt. Bolland also pushed high-budget, glossy magazine-style advertising campaigns featuring celebrities, another push upmarket.

But Rowe is reversing all of this. In its strategic update, M&S says (emphasis ours):

Our customers look to M&S not for fashion trends but for accessible products they can wear with confidence. This will be complemented by a refocus on stylish everyday essentials, which we will continually refresh to ensure they are current and competitive, and underpinned by standout M&S innovation.

Not only will the products be "everyday" rather than designer-style skirts, the prices are going to come down too. M&S says:

We will restore our price position by investing in everyday price and reducing the number of promotions and sales. Lowering prices and moving our price architecture towards 'Good' will make us more competitive, particularly on opening price points.

However, all of this will not be a quick fix. Rowe warns that this turnaround to revive sales will cost money. It will have an "adverse effect on profit in the short term."

M&S also delivered a brutal assessment of the retail market today, writing in the results:

We are operating in difficult and challenging times - consumer confidence has dipped, the clothing market is flat, online sales have slowed and there's deflation in the food market. Our customers are changing too as they become increasingly style and health conscious, shop around and expect more.

The downbeat market assessment, warning on profits, and big dip in full-year profits has sent M&S shares crashing almost 7% on Wednesday morning: