Marks & Spencer will cull 1,200 jobs and close 27 stores – including 25 Simply Food stores – after announcing its worst quarterly performance for more than a decade.

Food sales dropped by 5.2% on a like-for-like basis over the 13 weeks to 27 December, part of a drop in like-for-like UK sales of just over 7% for the period.

That was despite the company posting what it said was its best-ever single day of trading on 23 December.

The closure of 25 Simply Food outlets, with up to 780 jobs set to go as a result, brings to an end the rapid expansion of Simply Foods, with 168 of the small-format convenience stores opening since March 2007.

Although the number of stores in this format still stands at 370, these outlets have been blamed for both an increase in the cost base of the group and cannibilisation of food sales in its main store food halls.

A further 450 jobs will go at the group's head offices, representing around 15% of the workforce there, with M&S hoping to slash costs by up to £200m over the next two years.

“Food showed an improved trend quarter-on-quarter, reflecting the initiatives put in place around better values, promotional stance, innovation, increased availability and reduced waste,” said executive chairman Sir Stuart Rose.

“This improvement accelerated as we entered the Christmas period, culminating in our biggest trading day ever on 23 December, with record sales of over £50m.”

Commenting on the lay-offs, Rose said: “We are aware that the proposed changes… 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.”