Marks & Spencer today unveiled its worst sales figures for almost a decade and plans to axe up to 1,230 jobs.

M&S said UK like-for-like sales tumbled 7.1 per cent in the 13 weeks to 27 December - its biggest sales collapse since July-September 1999 - despite heavy price-cutting in the run-up to Christmas.

The company - which employs around around 70,000 staff in the UK - plans to close 27 stores with the loss of up to 780 jobs. Up to 450 more will go from its head office.

Of the stores to close, 25 are under-performing Simply Food outlets, and two are small main chain stores selling both food and clothes.

The cost-saving drive also involves changes to M&S's final salary pension scheme - by capping employees' annual increases in pensionable pay - and altering early retirement benefits for those who joined the scheme before 1996.

M&S hopes to cut costs by up to £200 million through the moves.

Executive chairman Sir Stuart Rose said: "We are aware that the proposed changes set out above will be difficult for those members of staff impacted, but, given that we expect challenging economic conditions to continue for at least the next 12 months, we believe we are taking the right action to maintain the strength of our business."

The cuts came as M&S said UK like-for-like food sales fell 5.2 per cent over the period, while general merchandise - which includes clothing - was down 8.9 per cent.

Union leaders expressed shock at the scale of the job cuts and called for urgent talks with M&S to discuss the redundancies.

John Gorle, national officer of Usdaw, said: "We want to talk to the company to get an understanding of the business case that has underpinned this decision.

"We are shocked at the severity of the cuts and we were not anticipating store closures. Our members will now be extremely worried.

"The company does not formally recognise trade unions but I hope they will meet with us to have a meaningful dialogue."

There were rumours that some workers could be laid off quickly but Mr Gorle said he would find it hard to understand why M&S needed to take such swift action.

He added that more than 35,000 jobs had been lost in the retail sector since November.

M&S sold nearly 130 million items and had 56 million customers in the 10 days before Christmas.

The group sold 18 million mince pies and 400,000 turkeys, executive chairman Sir Stuart Rose claimed, and on its busiest day - December 23 - M&S's food business took a record £50 million.

But its high-profile promotional sales days - begun at the end of November to boost trading - ate into the group's margins, which will hit profits this year.

Analysts expect the company to report profits of around £620 million this year - more than a third lower than last year's £1 billion.

Sir Stuart denied that today's update amounted to a profit warning after the group's cost-saving measures were taken into account.

"If it was a profit warning we would have had to say something earlier," he said.

Sir Stuart said there would "almost certainly" not be any further store closures, although he said the group was taking the "necessary action to keep ourselves lean and mean".

The retail chief has endured a difficult year as high street sales have been squeezed and his own role as executive chairman - contrary to City best practice - caused controversy.

But he said: "If this was an aeroplane flying through a storm the best thing to do is not to nip up the front and change the pilot."