* Rowe warns fixing clothing and homewares to hit profit
* M&S sees similar sales trend this year as last
* M&S full-year underlying pretax profit up 4.3 pct
* Shares fall 8.9 pct to 405 pence (Adds CEO quotes, further reaction)
By James Davey and Paul Sandle
LONDON, May 25 (Reuters) - A warning from Marks & Spencer's new boss of a short-term profit hit from efforts to turnaround its clothing business by cutting prices and improvingranges knocked its shares on Wednesday.
Steve Rowe, a 26-year M&S veteran, replaced Marc Bolland aschief executive of the 132-year-old British retailer last monthwith a remit to revive clothing, which contributes about 60percent of profit but has seen five years of falling sales.
Rowe said he would focus on M&S's most loyal customer, a50-year-old woman he described as "Mrs M&S", who had beenneglected in the chase for younger, more fashion-consciousshoppers.
The warning that it would take time for customers to noticethe improvements and return to M&S stores to buy products otherthan its successful food ranges, combined with the impact on itsmargin forecast shocked some investors, who experienced severalsuch "turnaround" plans during Bolland's six years in charge.
M&S, which has long been Britain's biggest clothingretailer, has seen its sales eroded by rivals like Next and a push from supermarkets into family clothing while youngershoppers favour Primark and H&M's cheap prices and morefashionable clothes or online stores like ASOS.
Rowe's plan is to focus on improvements to the quality, fitand availability of M&S's ranges, while lowering prices andreducing the proportion of sales on promotion.
Together with difficult trading conditions this "will havean adverse effect on profit in the short term" he said.
M&S shares, which are down a quarter over the last year,were trading 8.9 percent lower at 405 pence at 1157 GMT.
Some analysts were sceptical. "There is no easy fix for thegeneral merchandise business," said Freddie George at brokerCantor Fitzgerald, who has a "sell" rating on the company.
However, one large institutional investor, who spoke on thecondition of anonymity, said they were supportive of Rowe'sstrategy and were willing to give him time.
Rowe forecast that the sales trends this year would besimilar to last, when like-for-like sales in clothing andhomewares fell 2.9 percent.
Lower prices, and currency pressure, would also limit animprovement in the gross margin to 50-100 points. This was belowexpectations and further unnerved the market after M&S had madebig strides in boosting margins under its previous CEO.
Analysts at UBS said the new guidance implied about a 10percent downgrade to consensus profit forecasts, which prior toWednesday's financial update were 710 pounds and 744 millionpounds for 2016-17 and 2017-18 respectively.
M&S reported a 2.4 percent rise in revenue to 10.6 billionpounds ($15.5 billion) for the year to April 2.
Underlying pretax profit came in at 689.6 million pounds,beating analysts' average forecast of 673 million pounds and the661.2 million pounds made in 2014-15.($1 = 0.6843 pounds) (Editing by Adrian Croft and Alexander Smith)