HIGH street stalwart Marks and Spencer dramatically cut sales targets yesterday following the retailer’s first fall in profits for three years.

A mixed performance in women’swear and homewares resulted in a 1.8 per cent fall in like-for-like sales of general merchandise in the past year, company boss Marc Bolland revealed.

Underlying pre-tax profits dropped one per cent to £705.9m in the year to March 31, while total sales grew two per cent to £9.9bn, helped by a stronger performance in food.

The decline in profits came despite the company’s best marketing efforts, which have included celebrity-laden advertising campaigns featuring Joanna Lumley, Rosie Huntington-Whiteley and Ryan Reynolds.

In November 2010, Mr Bolland set a target to increase revenues by between £1.5bn and £2.5bn over three years but the harsh economic climate has resulted in this target being slashed to between £1.1bn and £1.7bn.

In addition, Mr Bolland said the group now expected to invest £200m less in its UK stores over the remaining two years of its strategy review.

In 2008, the retail chain saw its profits push through the £1bn barrier for the first time in a decade, but the financial crisis hurt shoppers and heralded an era of fierce high street discounting.

The dip in profits was the first fall since 2009 and comes hand in hand with a flat dividend award for shareholders of 17p.

While the weaker performance has been driven by a squeeze on household incomes in the UK, where the company has 700 stores, some analysts also placed a failure to keep up with its clothing rivals, including Next and Primark, at the heart of its problems.

And while Mr Bolland hailed the group’s “significant progress”, the company declined to comment on recent trading, which is likely to have been severely hit by the wet weather.

Nick Bubb, independent retail analyst, said the performance relied on some formidable cost control.

‘‘Going backwards in profits is never a good thing, while the flat dividend tells its own story,’’ he added.

The group launched 15 pilot stores in November last year to trial an easier shopping environment for customers with improved navigation.

Sales in the trial stores are 2.5 per cent higher than the norm and the group has decided introduce this format to the rest of its UK stores.