HOWZAT

M&S had been expected to generate pre-tax profits of £870 million this year. Cazenove, the investment bank, this morning said pre-tax profits could fall to as low as £775 million.

Phil Dorgan, retail analyst at Panmure Gordon, said: "We said that the M&S trading statement would be poor. We were wrong. It is absolutely dreadful.

"Like-for-like sales in clothing look to be down around 8 per cent and the fall in food of 4.5 per cent is one of the worst ever performances we have seen from a food retailer."

He added: "We don't quite accept the argument that M&S is a strong business in a weak market. Food is around half of sales and represents a huge problem. For years, the market has ignored the structural challenges in food. Now, it has become a major concern."

Times Archive, 1974: M&S in the downturn

Since the business of fashion so clearly reflects the facts of life, it is not surprising that in a period of economic uncertainty one should sense some disenchantment with that business

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Ian McDougall, retail analyst at Blue Oar Securities, said: "Forecasts will be hacked back and the shares' recent weakness will continue. It's still the case that Marks is stronger than most in the sector, but that view is unlikely to prevail in the short term."

Speculation of a possible profit warning began to rise at the end of last week after market figures showing that food sales in M&S had fallen 3 per cent in recent weeks, despite spiralling food price inflation.

Today's bleak statement could renew concerns among investors furious over Sir Stuart's promotion to the dual role of executive chairman. Investors warned M&S earlier this year that the move put too much power in the hands of one individual and forced the retailer to commit to appointing more independent non-executives onto the M&S board.

PIRC, the corporate governance watchdog, last week advised its members to vote against Sir Stuart's re-election.

Sir Stuart insisted that despite the warning, he was confident shareholders would back his controversial move to executive chairman. “I will arrive as chairman and leave as the chairman,” he said.

Sir Stuart was hailed as a saviour when returning to M&S four years ago to help defend the retailer from a possible takeover bid from Sir Philip Green, the Topshop billionaire.

Two months ago M&S reported pre-tax profits of £1 billion for 2007-2008, the highest for a decade, but Sir Stuart cautioned that trading was becoming tougher.

Today he added: "I have been open in that I think this slowdown is going to go right the way through to 2009, there is no sign of relief. We have to trade the business hard and make sure we are fully equipped to deal with a longer slowdown than anticipated."

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