Mr Rowe, who took on the top job from Marc Bolland in April, unveiled his overhaul plans as the group posted a 4.3% rise in underlying pre-tax profits to £689.6 million for the 53 weeks to April 2.
But the group said the investment in its revamp as well as tough conditions on the high street would “have an adverse effect on profit in the short term”.
M&S also dealt a blow to 11,000 staff as it announced plans to close its final salary pension scheme for future service accrual to existing members, having already closed it to new members since 2002.
But the group, which employs 70,000 store staff, said it would increase pay across the board following the introduction of the National Living Wage, to £8.50 an hour for all store staff outside London and to £9.65 in London, with pay rises also due to co-ordinators and managers from next April.
Mr Rowe said his clothing overhaul will see the group reduce everyday prices and cut back on promotions and clearance sales.
But it will remain focused on quality through “fabric, fit and finish”.
The group also plans to “re-establish our style authority”, with a focus on stylish wardrobe essentials to win back customers, and will reduce the number of product lines in its autumn/winter ranges.
As part of aims to improve its customer service, more staff will be put in store, in particular cafes and changing rooms.
The group admitted the turnaround of its clothing business “won’t happen overnight”, following a hefty 2.7% slide in sales over the final quarter of its financial year.
Mr Rowe said: “Our results last year were mixed. We continued to outperform on food but we underperformed on clothing and home sales.
“This is not satisfactory and today we are outlining our initial plans to address the issues and to position Marks & Spencer to deliver profitable sales growth.”
M&S said conditions remain challenging and signalled no immediate recovery in its clothing division as it said sales trends seen in the past financial year will continue.
Shares in the firm dropped nearly 7% on the gloomy profits outlook.
It took the shine off the increase in underlying profits, which marked the second annual rise in a row as it recovers from a run of falling earnings.
However, on a bottom-line basis, pre-tax profits fell 18.5% to £488.8 million.
Mr Rowe is the latest boss to seek to revive the fortunes of the clothing business, which has struggled in recent years.
He said the plans mark the first phase of his strategy for the company, with further announcements due on the group’s UK store estate and international division due in the autumn.
Mr Rowe said the group would cut prices on nearly a third - around 30% - of its clothing ranges, having already slashed price tags on 3.5 million garments in the past few weeks.
It will also take out 10% of its product range to simplify the group’s offering.
He said the group needed to win back “Mrs M&S” - its loyal army of women shoppers aged 50 and over, who he said have been “neglected” in recent years.
“I’ve committed to celebrate and cherish Mrs M&S,” said Mr Rowe.
“Our results have been disappointing, which suggests she’s been neglected in a few areas,” he added.
Sales at its food halls remained the bright spot in the results, with Mr Rowe praising “continued strong growth”.
Like-for-like food sales held flat in the fourth quarter despite tough conditions in the grocery sector and amid a supermarket price war.
M&S now wants to ramp up new convenience store openings, with around another 100 Simply Food outlets planned per year over the next two years, on top of 250 due to open by next March.
Analysts gave the strategy a cautious welcome.
Shore Capital expressed faith in Mr Rowe’s overhaul, saying he was “capable, decisive and passionate about the business”.
Liberum experts warned the group could fail to see profits growth for “some years”, with the “prize of profitable sales growth an aspiration and not a given”.
They added: “The issue of a UK store estate that is simply too large and too inflexible has been kicked down the road to be addressed in the autumn.”