Sir Stuart Rose pledged not to take a pay rise this year as Marks & Spencer announced that £200 million would have to be cut from costs after its worst sales figures in a decade.

The retailer’s executive chairman said that it would be inappropriate for him to take an increase after total UK sales fell 3.4 per cent in the 13 weeks to December 27 and the group confirmed it was cutting 1,230 jobs and closing 27 stores. Sir Stuart also made the final-salary pension scheme less attractive.

Along with previously announced cuts in capital spending and marketing, M&S said the measures would save £175 million to £200 million. It will cap annual increases in staff’s pensionable pay to 1 per cent and change early retirement benefits to cut costs.

Sir Stuart defended his position as chief executive and chairman. The dual role has drawn criticism but he was defiant, saying: “If this was an aeroplane flying through a storm, I don’t think the best thing to do is shoot the pilot.”

He was equally clear on the two 20 per cent-off “one-day spectaculars” before Christmas, which had analysts cutting forecasts of this year’s profits. Sir Stuart said he would hold them again “in a heartbeat” to get through some of the worst retail conditions he had seen. “I have been in this business for 38 years. Go back to 1973-74 when there were piles of rubbish on the street, and it was already bad and then got worse.” He said the difference now was the speed with which recession took hold, with the economy “going from 100 miles per hour to zero”.

Analysts downgraded profit forecasts for M&S to about £600 million. Last year it made £1 billion. The company changed its guidance for gross margins from 1 percentage point below 2007-08, to about 1.75 points below. Total sales, including international stores, fell 1.2 per cent for the 13 weeks to December 27. Clothing was worst hit, with total sales down 6.5 per cent against last year in Britain.

Nick Bubb, analyst at Pali International, said: “Today’s third-quarter like-for-like sales are bad, given the weak comparisons from the poor Christmas a year ago, but not so bad as we expected, thanks to a late surge pre-Christmas.”

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