The credit crunch could be about to claim some of its most glamorous victims after Marks & Spencer said yesterday that it was embarking on the biggest review of its advertising for years as part of a multimillion-pound cost-cutting drive.

Britain’s biggest retailer of clothing, which uses celebrities such as Twiggy to showcase its range of lingerie, skirts and coats, said that it is to cut its £145 million marketing budget by 20 per cent next year to save money.

Steven Sharp, marketing director, refused to rule out wholesale changes and conceded that some or all of the five models who will appear in M&S’s first Christmas advertisements next week with the pop group Take That, may no longer be with the company in 2009. He said: “We have lots of options, but you will just have to wait and see. Let’s get past Christmas. We have to take [the savings] from somewhere but I’ve got some great ideas.”

M&S said that it had little choice but to step up cost-cutting after reporting a 34 per cent fall, to £297.8 million, in pretax profits for the six months to September 27.

The company said that the money saved, not only in marketing but also in IT and distribution, would be reinvested in lower prices for customers and it conceded that redundancies may also be necessary.

M&S signalled a willingness to alter its advertising approach in September by consigning its much parodied “This is not just food” campaign to history and hiring Sir David Jason, the actor, to promote its Italian ready meals.

Twiggy and Erin O’Connor were brought in soon after Sir Stuart Rose took over at M&S four years ago and their initial womenswear campaigns were lauded as a huge success.

M&S’s “roster of the models” – which includes Lily Cole, Noémie Lenoir and Myleene Klass – are employed on a campaign-by-campaign basis. The model Elizabeth Jagger and M&S parted company in the summer.

Jessica Price-Brown, of Drapers Record, the fashion industry bible, said: “Signing Twiggy to support the changes to the womenswear ranges in 2005 was a master stroke because she held so much appeal for M&S’s core 45-plus female customer. But the M&S ‘celebrity model’ ads now feel tired and elements of them have been copied by competitors. There is a real need for a new message.”

M&S has been one of the biggest casualties of the high street slowdown this year and more than £1 billion was wiped from its share price in July after a bleak profit warning.

Shares in M&S rose 17p, or nearly 8 per cent, to 238½p yesterday on relief that the half-year results were not worse. M&S also held the interim dividend at 8.3p and insisted that there were, as yet, no plans to cut the full-year payout despite widespread speculation that a reduction is inevitable.

M&S reiterated that food sales fell by 5.3 per cent on a like-for-like basis over the six months to September 27, with clothing and homeware sales down by 6.2 per cent.

Sir Stuart, who is executive chairman, said that the economic environment was possibly the worst that he had seen since the early 1990s, but mounted a fierce defence of the business. He said that M&S had held its market share in clothing and was stemming customer losses in the food hall by cutting the price of about 530 core products such as milk and potatoes. He added: “I’ve always been an optimist and I don’t think things are that bad. We have a very strong brand, a robust plan and strategy to make sure we don’t fall down a hole.

“We have assets, we haven’t sold the family silver, we have cashflow in the business and a strong balance sheet. We have been around for 124¾ years and I think we’ll be around for a few more yet.”

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