Rose confident despite profits fall

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The group described current trading as "volatile" and said its key priorities were focused on tackling costs and being more competitive in food.

M&S's annual profits topped £1 billion for the last financial year, but analysts expect a figure closer to £650 million in the current period after half-year results showed a 34% decline to £297.8 million.

As previously announced, like-for-like sales fell 5.7% in the six months to September 27 after trading conditions deteriorated, particularly as shoppers looking to save on food bills snubbed M&S's premium goods.

The company said it was in the toughest trading climate since the early 1990s.

Sir Stuart, M&S's executive chairman, added: "I think everybody recognises that 2009, and probably right the way through 2009, is going to be tough. Now we are in a recession we are well-equipped to deal with it."

He held out hopes that lower interest rates - provided cuts are passed on to borrowers - will improve consumer confidence. "Maybe at the back end of 2009 we'll see blue skies," Sir Stuart added.

He remained upbeat about the festive season, saying: "People will want to have a traditional Christmas and look after themselves."

But he thought customers were "moving away from frivolity" when it came to present shopping. "People don't want trivia. It's the same with clothes - people are buying more sensibly".

Sir Stuart said he planned to manage the business through the downturn by tightly controlling costs, capital expenditure and stock levels. He added: "We are confident we have the right plan to bring M&S through these difficult times."