There were tentative signs of recovery at Marks & Spencer today, but executive chairman Sir Stuart Rose insisted that this was thanks to his own strategy rather than any signs of optimism on the High Street.

“I'd be delighted if I could say the economy is improving, but it is not,” Rose said. “The market is still extremely tough.”

The retailer was speaking as M&S unveiled a fall in like-for-like sales of 4.2% in the fourth quarter.

This was much better than some in the City were predicting, triggering a leap in the share price as analysts upgraded profit forecasts for the full year.

Last year, M&S made a profit of £1 billion for the first time in a decade — this is likely to tumble to about £600 million this year, calling into question the ­company's ­ability to keep paying the dividend.

The figures for the 13 weeks to 28 March compared with a 7.1% slump in the third quarter.

At that point, serious questions were being asked about Rose's vision for the company. Some suggested it was time for him to go.

Some investors also remain concerned by his dual role as chairman and chief executive, and want to know more about who will succeed him.

“We have kept costs under control and held on to cash,” Rose said.

“People understand what we are trying to do and customers know when they are getting a good deal.” Food sales fell 3.7% — also an improvement, perhaps justifying Rose's decision to axe food boss Steve Esom last July.

Critics said the food was simply too expensive heading into an economic downturn.

“We called a management change two quarters ago. Since then, we've had two quarters of improving performance,” Rose said.

The M&S Dine In for £10 offer is one factor behind the recovery.

City analysts were also expecting to see that margins had slipped.

Instead M&S, which unveils full-year results on 19 May, reported that they were holding firm.

Online sales were up 20% while international sales rose 23%.

“We've pulled levers and buttons on things like costs but there are no green shoots at all,” said Rose. “The best I can say for the economy is that it is getting no worse.”

The shares are down from a 12-month high of 417p and a peak two years ago of 750p. Today they moved up 281/4p to 2923/4p as the City digested the numbers. Although the figures were less bad than feared, this is still the sixth quarter in a row that sales have fallen.

Rose arrived at M&S in 2004, promising a step change in the company that has always been at the heart of the British High Street, but which has often struggled to keep investors happy.

In January, M&S announced 1200 job cuts and plans to close 27 stores as it moved to axe costs in line with falling revenues.

It is shutting 25 of its Simply Food stores and two regular stores.

The retailer is under fire on all fronts, facing competition from a resurgent J Sainsbury in food as well as cut-price clothing offers from the likes of Primark.

Despite this, M&S remains the biggest player in the UK clothing market with a 10% stake and the most trusted food retailer, according to surveys.

The Local Authority Pension Fund Forum, which has 1% of the shares, has tabled a shareholder resolution urging the group to split Rose's roles.

It said the combined role was a “clear breach” of the UK Combined Code on Corporate Governance.

Rose, who has just turned 60, is due to step down in 2011, although it is possible he will decide to go sooner.