Marks & Spencer saw annual pre-tax profit plunge by 15.7%, down to £658m in the year to March 31 2012 from £780.6m the previous year.
It was the first decline in profits at the company for three years.
Total sales grew 2% to £9.9bn, while in the UK sales were £8.9bn, 1.5% up on 2011. Like-for-like sales in the UK rose by 0.3%. However, general merchandise, which includes homewares, saw a drop of 1.8%.
Online sales delivered a better performance, rising 18% to £559m, and the retailer’s share of online traffic grew by 11%. There was a 300% rise in mobile site visits. As a result of its online growth, M&S said it would be scaling down its store expansion programme over the next two years, cutting investment in UK stores by £200m.
Chief Executive Marc Bolland said that the company had “performed well in a challenging economic environment”.