Marks & Spencer (M&S) today confirmed it will cut 1,230 jobs and close 27 stores after reporting one of its worst Christmas trading performances on record.

The retailer said it will shut 25 of its 355 Simply Food stores and two of its smaller M&S branded stores following the sales decline.

The Simply Food-branded shops are convenience stores that are often located near train and motorway service stations, selling only food, and were launched in 2001, under the then chairman and chief executive, Luc Vandevelde.

Over the 13 weeks to December 27, UK likes-for-like sales, which strip out trade from new stores opened during period, fell by 7.1 per cent after an 8.9 per decline in general merchandise, which includes clothing, and a 5.2 per cent drop in food trade.

The group also warned that it now expected annual retail gross margins to be 175 basis points lower than last year as a result of increased discounting.

However, Sir Stuart Rose, chairman at M&S, today denied that the expected fall in margins was a profits warning and refused to be drawn on whether the company would pay a dividend, stating that the management would not make a decision until May.

Sir Stuart added that while pre-Christmas discounting, which included two one-day “spectaculars” when selected items were reduced by 20 per cent, would hit margins, he thought the chain did the right thing to “give customers a Christmas.” Over 56 million customers visited M&S over the festive period.

Yesterday, The Times exclusively revealed that M&S would axe 1,000 jobs to counter poor trading over the crucial festive season.

However, today's figure is worst than expected with 780 positions to go at the 27 stores set for closure as well as the 450 staff who will be made redundant at the company's head office.

The group will also cap annual increases in staff’s pensionable pay to 1 per cent and change early retirement benefits to cut costs.

Sir Stuart said today: “We are aware that the proposed changes set out above will be difficult for those members of staff impacted, but given that we expect challenging economic conditions to continue for at least the next 12 months we believe we are taking the right action to maintain the strength of our business.”

He added that there would “almost certainly” be no more store closures and that measures would affect under 1 per cent of the group’s 70,000 plus staff.

Moreover, Sir Stuart dismissed his or other top management’s positions were under threat at the company as a result of its recent performance, stating that if a plane was flying through a storm, getting rid of the pilot was not the best idea. Last year Sir Stuart provoked protest among some investors by taking the role of executive chairman, encompassing both his previous chief executive position and that of chairman.

M&S share moved higher in early trading, up 2.5p to 244.75p, with traders relieved that trading was no worse than feared.

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