MAKSY Marks and Spencer Group (QX)

LONDON—Marks & Spencer Group PLC reported a 19% drop in fiscal-year pretax profit, warning that more investment to turn around its struggling clothing and home-products business would put a near-term squeeze on profit margins.

The British food and clothing retailer said sales at its nonfood business remained unsatisfactory.

"We are investing to re-establish our price position by sharpening prices and to enhance service by putting more employees into our stores," Chief Executive Steve Rowe said.

"These actions, combined with the difficult trading conditions, will have an adverse effect on profit in the short term," Mr. Rowe added.

Shares in the company, one of the U.K.'s best-known retailing names, opening sharply lower in London, falling 6.6%, the biggest decliner among FTSE 100 stocks.

Marks & Spencer said pretax profit fell to 488.8 million pounds ($708.57 million) in the 53 weeks ended April 2 from GBP600 million in the same period a year ago, with the company taking a series of charges which offset modest growth in revenue and a stronger performance at its food stores.

The retailer said GBP200.8 million in charges derived from a provision at M&S Bank, impairment charges at its international operations, costs related the review of its U.K. stores, and write-offs of information-technology assets.

Profit, before tax and these exceptional items, rose 4.3% to GBP689.6 million on a 2.4% rise in revenue to GBP10.56 billion.

Write to Tapan Panchal at Tapan.Panchal@wsj.com

(END) Dow Jones Newswires

May 25, 2016 04:15 ET (08:15 GMT)

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