Total turnover also fell, from£8.3 billion the year before to£7.94 billion. However, the retailer managed to reduce operating costs by 0.1 per cent. The drop in profit was broadly in line with analysts' expectations.
Chief executive Stuart Rose defended the figures, saying that although sweeping changes had been made to the retailer's management structure and operations, there were no quick fixes.
He pointed to a switch in focus to core businesses, a renegotiation of supplier terms, the sale of its financial services and a reduction in stocks by£1.3 billion as key initiatives designed to turn the business around. However, he suggested that the strategy would not begin to bear fruit until the end of this financial year.
Rose said: 'Despite reducing stocks and commitment 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. We stated we would focus on the business in 2004/2005, drive it in 2005/2006 and, beyond that, broaden its horizons.'
A portfolio revamp is also expected to be announced soon. Click here for more.