Marks & Spencer sales plunge, to cut 1k jobs

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: Marks & Spencer, Britain's biggest clothing retailer, reported its worst quarterly sales performance for a decade and said it will cut around 1,230 jobs in a bid to save money in a tough trading environment.

Executive chairman Stuart Rose said he expected challenging economic conditions to continue for at least the next 12 months.

"Every company has to cut its cloth according to its means and we are just making sure that ... our company is well placed to deal with what will be an incredibly difficult year," he told reporters on Wednesday.

The 125-year-old clothing, food and homewares group said like-for-like sales fell 7.1% in Britain in the 13 weeks to December 27, the third quarter of its financial year.

Forecasts were for a fall ranging from 5.5-9.6%, according to a company poll of nine analysts.

M&S shares, which have dropped two thirds in value over the past 20 months and underperformed the DJ Stoxx European retail index by 50% last year, hit an eight-week high before easing back to be up 2.2% at 244 pence at 0915 GMT, valuing it at 3.7 billion pounds ($5.5 billion).

The news from M&S, which serves more than 21 million Britons a week from over 600 stores, will add to the gloom surrounding the economy as the Bank of England starts its monthly policy meeting, at which it is expected to cut interest rates to their lowest level since it was set up in 1694.

The figures also coincided with the start of a three-day tour of Britain by Prime Minister Gordon Brown to talk to businesses and households about the economic downturn, ahead of a jobs summit next week.

Finance Minister Alistair Darling told the Financial Times on Wednesday that Britain was "far from through" a recession, while surveys showed demand for staff and take-home pay both weakening. M&S said it expected its UK gross profit margin for the year to March 31 to be about 1.75 percentage points below

2007-08 due to promotions and discounts, worse than its previous guidance for a fall of around 1 point.

It said was managing costs tightly and now expected operating cost growth for the current financial year to be towards the lower end of its forecast range of 4-5%.