Store staff at Marks & Spencer have seen their bonus payout halved this year, despite profits at the retailer hitting £1 billion, their highest level for a decade.

Missed performance targets also mean Sir Stuart Rose, M&S's chief executive, will not be paid a bonus this year. Last year he collected a £1 million cash payout on top of his basic salary of £975,000.

"We didn't cut the bonus, we didn't earn it," Sir Stuart said. "If you don't meet the target, it's tough luck. I don't like it any more than you."

Sir Stuart said M&S store teams would share a £12.8 million bonus pot, in recognition of "their hard work" over the past year. But last year, as profits stormed ahead, staff shared £26 million.

It came as M&S said trading conditions on the UK high street were continuing to deteriorate. The retailer signalled that it would be relying on international expansion for sales growth.

Sir Stuart said M&S was "cautious in our outlook"

"The market has been very difficult to read. April and May last year were very hot, they were our summer and this year we had the earliest Easter for 90 years and all the half terms were different," he said.

"It's difficult to read the tea leaves."

Charles Nicholls, analyst at Landsbanki, said: "We believe the outlook for profit in the group is poor, given an over-supplied clothing market and a food operation where sales in existing units are declining."

Tony Shiret, analyst at Credit Suisse, added that M&S appeared to have only made £1 billion through a lower-than-expected interest charge. In a note to clients, he said: "This is, in our view, the classic M&S wait-and-hope type of statement."

Total sales at M&S, which is considering selling branded as well as M&S goods, were up 5 per cent at more than £9 billion, but the UK lagged the international business, where sales rose 16.8 per cent.

Like-for-like sales, which strip out new store openings, fell 0.5 per cent, with falls in underlying sales of both food and general merchandise.

It comes after the high street chain surprised investors in January with its first fall in sales since mid-2005. Sir Stuart has had a series of bruising run-ins with shareholders over his contentious planned elevation to chairman.

Against the backdrop of the slowdown in the high street, M&S shares have slid to prices close to those seen when Sir Stuart was first parachuted in to defend the retailer against a bid by Sir Philip Green four years ago.

Shares fell nearly 5 per cent, or 20.75p to 396.25p after a rise in early trading.

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