Earlier this week, SG Securities cut its profit estimate for the company to 780 million pounds from 805 million.

In the year to March 31, 1998, the group reported pre-tax profits of 1.168 billion pounds on sales of 8.243 billion.

The retailer said group profits would be hit by a total 175 million pounds. A shortfall in the UK sales would lead to a loss of projected margin on sales of 90 million and the increased cost of the sale clearance a further 60 million. Lower than expected results from Europe would account for the other 25 million.

Sales in November and December were "significantly lower" than expected at the time of its interim statement, particularly in clothing and home furnishing, it said in a statement.

Total sales declined by 4.2 per cent in the five weeks to January 2 and by 4.4 per cent in the 15 weeks to January 2. This compares with an increase in total sales of 2.0 per cent in the first half to September 26, 1998.

Chief executive Peter Salsbury -- who takes up his job next month after a highly public play for the top post last November -- also announced a new business structure, which involves the setting up three new units covering the UK retail, overseas retail and financial services.