Marks & Spencer is to spend £120m to £150m a year for each of the next three years to revamp its in-store trading, supply chain, and distribution systems.
Stuart Rose, Marks & Spencer's chairman, told the retailer's annual general meeting today that the investment was needed to position M&S for the future.
He said a key focus would be to grow online sales to £500m a year by 2010. Online sales had grown 70% in the past year, and had shown strong growth again in the first quarter, he said.
Rose said he expected trading conditions to remain tough for at least two years. M&S would continue to refurbish its stores despite this, and continue to cut input and operational costs.
The expansion of online business was in addition to growing the store space, especially overseas, as this was key to growing profits, he said.
Ian Dyson, Marks & Spencer's financial director, said profits had reached £1bn for the first time, on sales of £9bn. Margins were under pressure, but despite debt rising to £3.1bn, the balance sheet remained strong, and M&S was still able to raise credit relatively cheaply.