Rose defends M&S and fends off talk of a takeover

The all-powerful chairman saw like-for-like sales in the 13 weeks to 27 December tumble 7.1%, on the face of it a worse performance than seen from rivals John Lewis and Debenhams.

But Rose said M&S remains the most popular retailer in the UK, enjoying a record trading day of over £50 million on 23 December.

"People get obsessed by like-for-like sales and I understand that, but what you are looking at is a fairly robust performance in difficult circumstances. In the last ten days traffic has been strong and the food business has come back," he said.

He is taking an axe to costs, removing 1230 jobs and capping pay rises.

This pleased the City, which marked the shares up 3p to 2413/4p.

They are dramatically down from a peak of well over £7 in April 2007, suggesting that M&S would be a bid target in normal times.

"I've nothing to say about that, but we are not in normal times," said Rose.

Analysts say M&S would be facing a takeover if debt finance were more readily available. The feeling that Topshop mogul Sir Philip Green, who tried to buy the business in 2004, would like to make another bid is persistent.

Food sales were off 5.2% in the quarter, while general sales sank 8.9% but M&S claims it is not losing market share after slashing prices.

"If half the population of Britain comes into your stores in one day and you have to give away a few pence to get them to come in, that's just part of how we manage the business. We are a powerful brand," Rose said.

The City was reassured that M&S didn't have to lower profit forecasts again. It is expected to make £630 million in the year to April 2009, which means dividend payments to shareholders are safe for now.

Nick Bubb at Pali International said the sales figures were "bad, but not quite so bad as we expected". He added: "The market will probably like the savage cost-cutting so the shares will probably rally in the short term. But given M&S's structural problems and the grim outlook for the consumer, we retain a sell."

Bubb doubts that the dividend can be held in 2010. The profits are down from £1 billion last year, a sign of how tough the market has been and, say critics, how stuttering Rose's revolution has been.

He took on the job of saving M&S five years ago, moving from chief executive to executive chairman last year in a controversial move that leaves him taking most of the credit or blame for the stores' fortunes. Sir Stuart denied he was under more pressure than at any other time in his career. "When you get as thick skinned as I am, you don't worry about that. You take the good times with the bad," he said.

For staff at 27 stores that are being shut down, times are definitely bad.

The shops singled out are smaller concerns that lack car-parking space, 25 of which are Simply Food stores.

There will be 780 job cuts in the shops, while another 450 will go from head office. Pay rises are capped at 1%.