M&S cuts spending as sales slip

The retail bellwether saw UK like-for-like sales fall 6.1% in the 13 weeks to September 27 - its worst quarterly performance since January-April 2005.

But shares in M&S gained more than 10% amid relief among investors expecting an even worse slide, while the cost-cutting moves were also welcomed.

M&S said it had "significantly toned down" its store revamp programme and expects to spend £700 million this year - below the £1 billion announced last November.

Hard-hit shoppers looking to save on food bills have snubbed M&S's premium-end goods, with sales down 5.9% over the period. This was despite promotions such at its "Meal for two for £10" offer, which executive chairman Sir Stuart Rose said had been "spectacularly successful".

The executive chairman said it was "the right thing to do" to sacrifice some margin within its food business to help out customers, although he remains determined that M&S will not compromise on quality.

"We are responding to the issues our customers are facing," he said.

General merchandise - including clothing - saw like-for-like sales fall 6.4%, although Sir Stuart said M&S continued to offer "quality, stylish product" and was confident about its autumn and winter ranges. But he also warned that the group's margins would be hit by its price-cutting promotions in the tougher trading environment, despite a tight rein on costs.

Hargreaves Lansdown analyst Keith Bowman said: "Whilst these are not exactly glowing figures, they are not the over-the-cliff disaster which many investors had feared."

But the deepening economic slowdown - and the recent turmoil in the banking sector - have jolted consumers and an interest rate cut is needed to restore confidence, Sir Stuart said, adding: "It would be a brave person to say we are at the bottom ... there is a lot of uncertainty about."