Marks & Spencer today said half-year profits fell by a third after sales suffered in the toughest conditions to hit the retailer since the early 1990s.
The 34% decline in profits to £297.8 million came after UK like-for-like sales slid 5.7% in the six months to September 27.
Executive chairman Sir Stuart Rose described trading during October as volatile and said the company remained cautious about the outlook for the remainder of its financial year.
Sir Stuart this morning denied there was a problem at the store.
“I think it's only a reflection of what we've being saying for the last six months, times are tough,” he said.
“They (the results) are not a shock to us at all and they won't be a shock to the market.
“We are obviously a very widely spread business.
“I said earlier this year that we are, if you like, a sort of early warning system of what was going on.
“We talk to our customers all the time and they tell us, ‘Look, we feel your squeeze'.”
Speaking on GMTV, he predicted more hard times for the economy in the year ahead. “I think everybody recognises that 2009, and probably right the way through 2009, is going to be tough,” he said.
“If the Government or the Bank of England reduce interest rates this Thursday — and I think there's a very high likelihood that they will — and more importantly, if the banks themselves reduce the inter-banking rate — in other words, lend each other money at a cheaper rate — then some of that will filter through in terms of consumer confidence to the UK consumer.
“Maybe at the back end of 2009 we'll see blue skies.”
Sir Stuart began his retail career at Marks & Spencer in 1972 before going on to the Burton Group, and prior to rejoining M&S in 2004, he was chief executive of Arcadia Group plc.
M&S said: “The economic environment has changed dramatically and we are now facing the most difficult retail conditions since the early 90s.”
Today's profits figure is slightly better than the £290 million expected in the City. M&S is forecast to report full-year profits of around £640 million — a far cry from the previous year's figure of more than £1 billion.
Sir Stuart said the company would 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.”
The company used today's results to outline its priorities for the remainder of the year and into next year.
These include maintaining its market leading position in general merchandise and improving the company's performance in food, where its market share has declined from 4.3% to 4%.
It said its “Dine in for £10” promotion and weekend offers were starting to drive footfall and had encouraged renewed interest from the “more occasional customer”.