Marks & Spencer Shares Slump

Rose attributed the slowdown to declining consumer confidence levels and a challenging economic environment. "The customer is definitely feeling the pinch....We have been seeing changes in behavior," he said. "At our preliminary results in May, we reported a mixed start to our 2008-09 financial year and expressed caution about consumer sentiment," Rose added. "Since then, consumer confidence levels have deteriorated markedly and market conditions have become more challenging."

In contrast, in the final quarter of the 2007-08 fiscal year, U.K. sales rose 3.7 percent and general merchandise sales rose 0.1 percent. On a like-for-like basis, sales declined 1.7 percent in the fourth quarter.

"[There are] no surprises to us that the sales figures are very poor," said Freddie George, research analyst at Seymour Pierce in London, in a research note Wednesday. "Our major concern, however, is that, not only have sales been weak, but also gross margins....We believe heavy promotional activity on fashion, home and food will have impacted gross margins."

George forecast pretax profits of 825 million pounds, or $1.6 billion, for M&S in the 2008-09 financial year, which he described as at "the low end of the range." The company will release second-quarter results Nov. 4.