LONDON, Aug 7 (Reuters) - British ad group WPP ( WPP )

said on Thursday it was on track to meet annual forecasts which

it downgraded last month, when it warned of lower client spend

and named senior Microsoft ( MSFT ) executive Cindy Rose as its new CEO

to lead a recovery.

For the three months to the end of June, WPP ( WPP ) reported

net sales, which it calls revenue less pass-through costs, of

2.54 billion pounds ($3.40 billion), down 5.8% on an underlying

basis.

Rose will take the helm on Sept. 1, after a difficult

period for the group, which has been hit this year by the loss

of big accounts such as Mars Inc and Paramount, as well as a

softer new business environment.

WPP ( WPP ) said in its statement the new CEO would lead a

review of strategy and future capital allocation policy after

taking over from Mark Read, who announced in June he was leaving

after a seven-year stint during which WPP's ( WPP ) share price has

halved.

Having lost its crown as the world's biggest ad group to

France's Publicis last year, WPP ( WPP ) is also grappling with the

transformational impact of AI, which gives clients the tools to

create and manage more of their own marketing campaigns.

The company warned in July that net sales would fall by 3%

to 5% this year, a downgrade on its previous forecast for them

to be flat to down 2%.

($1 = 0.7481 pounds)